The most important thing in a bear market is: don't lose your principal. Why do I say this? Because it's easy to lose money, but hard to recover. Let's do a simple calculation:

  • Loss of 20%, need to increase by 25% to break even

  • Loss of 33%, need to increase by 50%

  • Loss of 50%, need to double (100%)

  • Loss of 80%, need to increase by 400%

The more you lose, the exponentially harder it becomes to recover. Many people made some money in a bull market, but in a bear market, they over-leverage or go all in, resulting in direct halving and then halving again, leaving their account with just a small amount, with no chance to turn things around. The cruelest part of a bear market is not the price drop, but that many people have directly 'exited' and can never come back.

The core idea of protecting the principal actually boils down to three points:

1/ Don't go all in, don't go all in, don't go all in
Always keep a portion of cash or stable assets, even if it seems like 'lying flat' with no returns, it's better than going to zero. Cash is the hardest currency in a bear market; it gives you options and survival rights.

2/ Control your position and risk
No single investment should exceed 10-20% of total capital (depending on your risk preference). Use stop-loss, dollar-cost averaging, and gradual accumulation methods; don't fantasize about hitting the bottom perfectly in one go. Use leverage sparingly or not at all; in a bear market, leverage is an accelerator, but if the direction is wrong, it's a coffin lid.

3/ Don't let your mindset collapse
What wears you down the most in a bear market is not the account numbers turning red, but the anxiety of watching the market every day and FOMO/FUD. Set rules and execute them; don’t frequently chase hot topics or listen to rumors. Many people are not killed by the market; they are killed by their own emotions.

Buffett has a classic saying

Rule No.1: Never lose money.
Rule No.2: Never forget Rule No.1.

The ones who survive the longest in a bear market are not the ones who make the most, but those who lose the least and are still present. Get through it, when the bull market comes, those who still have their principal usually get the biggest rewards. So now ask yourself:
Is my principal safe? Is my position reasonable? Are the rules still being followed? If the answers are all yes, then you've already won more than half in the bear market. The rest is up to time.