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QUALIPORT
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Reviewing your investments during the past few years, you may well have asked: "What has the bear market ever done for me?" Though your shares have suffered, falling markets do bring many positives. Here are five reasons to be cheerful. 1. The bear market has improved your stock picking Regardless of the stock picking strategy employed, you'll almost certainly be nursing losses from the start of 2000. So there's something to be learnt from just that -- the stock market is never a one-way street. In terms of picking individual shares, just about every technique has come under scrutiny. So, there should be ample scope to review your mistakes and refine your strategy. In time, you'll thank the bear market for the education it's provided. In terms of the Qualiport, the importance of patience and valuation has come to the fore. The bear market has taught this portfolio that great businesses at cheap prices can come to those who wait. 2. The bear market has highlighted stronger businesses
Not only should the bear market have honed your investment skills, the economic downturn has forced companies to shape up, too. It's a sad fact of corporate life, but weaker businesses do go to the wall in times of trouble. Why is this stock market Darwinism a benefit for investors? Simply, those firms that remain in good form obviously possess some sort of robust, competitive strength -- a key attribute for long-term investors. And with healthy businesses few and far between at the moment, they should be easier to spot. As rivals disappear, the survivors grow relatively stronger, and will prosper accordingly when the upturn eventually arrives. For the Qualiport in particular, the bear market has unmasked 'quality' pretenders such as MMT Computing (LSE: MMT) and PizzaExpress (LSE: PIZ). 3. The bear market has exposed corporate shenanigans Somebody once said a bear market uncovers what the auditors miss. Never a truer word has been spoken, since the market downturn has unravelled numerous cases of accounting malpractice. Falling profits have brought 'fat cat' boardroom pay and generous stock options into focus as well. Sadly, unscrupulous beancounters and greedy bosses will always be a fact of stock market life. However, you'll have become far more sceptical of cavalier boardroom antics of late -- and rightly so. The bear market has thankfully re-ignited shareholder activism and most companies are taking the criticisms on board. Still, those footnotes in the accounts and the corporate governance review remain obligatory reading in any annual report. 4. The bear market has revealed the professional cowboys The long bull market created many investment geniuses. This bear market though has shaken out the cowboys. One of the many 'expert' casualties has been the professional fund manager. Seen by many as being able to switch into cash while the index tracker followed the market down, the facts tell a different story. Other corners of the financial services industry savaged by the bear include split capital trusts, endowment peddlers and so-called precipice bonds. Once famous tech tipsters and have gone into hiding as well. All in all, the bear market has re-emphasised the significance of investment simplicity and transparency. Cash ISAs, index trackers and the like provide relatively few sleepless nights in times of trouble. You'll certainly remember all the recent industry problems when the next round of esoteric products creeps onto the market. 5. The bear market has presented a buying opportunity In March, the stock market fell to a level where its dividend yield was greater than the income from gilts -- the first time ever since 1959. Shares were cheap. Though the market has rallied about 20% since, FTSE 4,000 still allows investors to buy at late-1996 levels. Every study shows the stock market beating mainstream investment alternatives over the long term. Unless this time really is different and global capitalism is at an end, it's fair to expect the market to reassert its outperformance sooner or later. Rather than focus on the recent past, investors should look to the future: the bear market presents a good buying opportunity.