The first half of 2022 was the “worst” six months of the stock market since 1970 according to the financial media. The S&P 500 is in bear market territory. The tech-heavy Nasdaq is down 30%. Even the bond market, which is usually up when the stock market is down, is down by double digits. What a blood bath!

I had rolled over an old 401k account to an IRA last October. By the end of June, the account was down nearly 15%. Let’s take a closer look at how I invested the money.

The Initial balance was about $711k, which I used to invest in 3054 shares of US Total Stock Fund (USTSF), 4511 shares of Global Real Estate Investment Fund (GREIF), 4900 shares of International Stock Fund (INTSF), 263 shares of Nasdaq 100 Stock Fund (NDQSF), and 53109 shares of High Yield Corporate Bond Fund (HYCBF). Note that all of these symbols are pseudonyms. 

After the initial investment, I made only one change in April, which was to sell some GREIF and HYCBF to buy 223 shares of Gold Fund (GOLDF). In the table below, I show how the amount of each asset increased (green) or decreased (red). In the last two rows, I also show the value and the income of the portfolio and how they increased or decreased over time.

Here are a few observations:

1. Because I turned on the automatic reinvestment, the number of each asset has been increasing steadily, with the exception of the sales of some GREIF and HYCBF to buy GOLDF. 
2. The value of the portfolio reached its peak at the end of last year and has been lower in subsequent quarters.
3. The income from the portfolio has been increasing with the exception of the last period when I sold income-producing GREIF and HYCBF to buy non-income-producing GOLDF. Even with that factored in, it’s higher than it was at the beginning. This again validates Nobel Laureate Robert Shiller’s winning discovery, which I wrote about in 2008.

Can you now see the blessing of the bear market hidden in plain sight? These days, with assets so much cheaper than before, the income from the portfolio can buy ever-increasing amounts of assets, leading to even higher income! Ultimately in retirement, what will determine my wellbeing is not the value of my portfolio today, which by then will be forgotten, but how many (numbers of) assets I am able to accumulate and how much income they will produce. 

Let’s sum up: A bull market is good for feeling good now. A bear market is good for wealth accumulation. There is no need to panic!

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