bear markets are an investor’s best friend during major stockmarket downtrends you stand a better chance of building up a big lead over indexed investors if your goal is to beat the market over the long term then bear markets play a crucial role of course even when you beat a falling market odds are that you still lose money in absolute terms but “beating the market” is relative not absolute there is both theoretical as well as empirical support for shifting your perspective theoretically it stands to reason that it would be easier to add value during a bear market since time spent in lowerrisk stocks or other asset classes will cause your portfolio to lose less than the market itself during bull markets those lowerrisk stocks or alternative assets typically will lag the market this insight is supported by the data at least as far as investment newsletters are concerned the chart below shows the percentage of investment newsletters audited by my firm that beat the market during uptrends and downtrends since 1980 to determine the beginning and end dates of the major trend i relied on a calendar of bull and bear markets maintained by ned davis research notice that the percentage of newsletters beating the market is far higher in bear markets more than twice as high in fact than during the average bull market note also that this bearmarket percentage is above 50 if you were relying on performance during bull markets alone to beat the market over the long term your odds of success would be far less this same pattern of investment performance is also evident with warren buffett chairman and ceo of berkshire hathaway brka  brkb  who is widely considered to be the most successful investor of these times in calendar years since 1965 when buffett acquired berkshire in which the sp 500 spx declined buffett’s annual alpha the amount by which he beat the sp 500 averaged 233 percentage points in contrast buffett’s alpha in calendar years when the sp 500 rose was 32 percentage points if we focus on the period since 2000 buffett’s annual alpha during years in which the sp 500 declined was 214 percentage points in contrast to minus 36 percentage points in years when the index rose which means that for the past 20 years buffett would not have beaten the market were it not for bear markets the goal of pointing out these statistics is to bolster your resolve to stick to your plan during bear markets like the one we’re in now that can be difficult since in bear markets you will most likely be losing money even if you’re beating the market itself so you will be tempted to secondguess your strategy or even throw in the towel there’s great irony in that temptation if you succumb you would be giving up just as the odds of beating the market over the long term may be improving the presumption of this advice is that you have an investment strategy if you don’t then contact a qualified financial planner and get one now more than ever you need to be disciplined about your money mark hulbert is a regular contributor to marketwatch his hulbert ratings tracks investment newsletters that pay a flat fee to be audited he can be reached at markhulbertratingscom more these 7 beatendown value stocks are a buy says a money manager who has outperformed the sp 500 for 30 years also read the stock market’s next big rally might just be a bear in bull’s clothing