How to Ride Out a Bear Market

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In the next few weeks, the millions of Americans who have been investing their retirement funds in the stock market through their 401(k) plans or Individual Retirement Accounts are going to open their second-quarter statements and be shocked by the losses to their nest eggs.

When they suddenly face these losses, the fear could trigger another wave of selling, this time out of panic. In fact, it's almost surprising that the stock market losses haven't made bigger headlines for the financial media. 

Perhaps the stock market's decline has been overshadowed -- at least in the media -- by the rise in oil prices. Or by the soaring statistics for bankruptcies and foreclosures, which hit closer to home.

Perhaps investors are soothed by the promises of politicians that things will soon be better, which is a big reason why presidential election years are traditionally good ones for the stock market. 

Not this year. As consumer confidence statistics touch record lows, the stock market has fallen sharply in the first half of the year.

And I'm starting to get email queries like this one: 

I'm losing money fast in my retirement account mutual funds.

I'm fifty years old, what do I do if all of my money is Chicken Money?

I'm in a panic and beginning to feel like it's a waste of time and money trying to save for retirement.

I'm down to $105,000. What should I do?

I'm tempted to give my standard answer, in which I truly believe: Over the long run, a diversified portfolio of stock market investments is your only real choice to grow your funds and beat inflation. After all, there's never been a 20-year period where you'd have lost money in a diversified portfolio of large-company stocks with dividends reinvested.