Transform Fear into Profit by Buying During Bear Markets

In early 2016, global jitters sent the S&P 500 plunging 10% in days. Panic headlines begged investors to flee. But Ray Dalio had a playbook. He’d designed an “All-Weather Portfolio” with six core assets that never fell in unison—stocks, bonds, real estate, commodities, inflation-protected securities, and foreign bonds. While the S&P 500 tumbled, that portfolio actually turned a small gain of almost 1%.

At Creative Planning, we shared Ray’s strategy with our workshop in Davos and urged clients to keep calm and invest more. They followed our rule: deploy 20% of their buffer cash at each 10% pullback. This discipline turned fear into opportunity. Over the next 12 months, while the S&P surged 69.5%, those who followed the plan profited even more because they bought at the lows.

Data from Oaktree Capital shows that bear markets are followed by bull runs that outpace the drops—on average, a 69% rebound over the succeeding year. Behavioral finance teaches that crowd panic makes these moments rare window-shopping sales.

By defining your own sale thresholds and sizing your “dry powder” in advance, you flip the script: a market crash becomes your best friend. That’s how great investors build wealth in any climate.

First, write down clear sale triggers—like a 20% drop in your chosen index. Then, set aside a ‘dry powder’ cash cushion to deploy when those triggers hit. Finally, invest 10–20% of that reserve at each milestone and track the rebound in the following year. By sticking to this plan, you’ll consistently turn market fear into profit. Try identifying your sale trigger today.