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This blog is not designed to predict a coming bear market, but simply let you the reader know of options to seek out to protect yourself in bear market times. There are a number of options at the investors disposal to try to help lessen the amount of damage that a bear market can do to your portfolio. Diversification is always a key when protecting against large losses, and diversification will certainly be a major topic here in the future.            

Dividend paying stocks are another key ingredient to beating a bear market. Jeremy Siegel, well known for writing such books as Stocks for the Long Run, always stresses the importance of dividends. Motley Fool, provided an article today speaking of Siegel's positions on dividends and past performance examples. Dividend paying stocks should outperform for more than reason during bear markets. First of all, the investors real return is obviously helped by the dividend payment. Secondly, dividend paying stocks are generally stocks who have a large amount of cash on hand, and have a proven business model. While all stocks can be subject to bear markets, those that are unproven always take the largest hits.

A certificate of deposit, or a CD, is another important tool in staying away from a total collapse in a bear market. CD's are the most readily available and virtually risk-free promissory note issued by banks to consumers. Treasury securities are another type of debt financing instrument that some investors like to use to hedge their portfolio of stocks. Treasuries should never be expected to outperform equities over the long run, but there is a place for them in hedging against hard times.

A very important part of staying safe in a difficult bear market is keeping track of your investments. Some investors simply pay no attention at all to their portfolios, and then wonder what has happened. This is exactly what you should not do. If you do not have the time to do some research yourself on your portfolio and current conditions, you should not be managing your own portfolio. Stay safe in those tough markets, because its all about preserving capital and growing your funds!