Market Notes
系列：Fund Strategy

Index funds in a bear market

Index funds in a bear: back to valuation, build at low PE% Build zone PE percentile < 30% Hold zone 30% ~ 60% Trim zone PE% > 60% staged trim Current (bear low) Bear markets are pessimistic with few participants; build with the valuation strategy for peace of mind — high certainty, at the cost of a long cycle.
Figure: Index funds in a bear still use the valuation strategy — use PE percentile as the ruler: below 30% enters the build zone, above 60% starts staged trimming.

How to invest in index funds during a bear market?

The most suitable strategy for index funds is still the valuation strategy.

Because in a bear market the market is extremely pessimistic and few investors participate, the valuation strategy lets us build positions with peace of mind.

Although the valuation strategy has a long investment cycle, its certainty is very high!

Valuation build: start below PE 30%, add every 2% drop, +0.1 size PE percentile (falls through the bear) PE percentile = 30% (build line) Build zone (PE < 30%) NAV (add every 2% drop, +0.1 size) → ✓ Build below PE<30%　✓ add every 2% drop　✓ +0.1 size per 2% drop (buy more as it falls)
Figure: Once PE percentile breaks below 30% you enter the build zone; after that, add once every 2% NAV drop, and each add is 0.1 larger — buy more as it falls.

Buy strategy

  • When PE < 30%, prepare to start building;
  • Add in tranches every time NAV falls another 2%;
  • Each 2% drop adds 0.1 to the position size.

Sell strategy

  • PE > 60%, trim 20%;
  • PE > 70%, trim 20%;
  • PE > 80%, trim 20%; if NAV drops more than 8% from its recent high in the short term, clear;
  • PE > 90%, trim 20%; if NAV drops more than 10% from its recent high in the short term, clear;
  • PE > 100%, clear directly.

⚠️ This article is a methodological framework for illustration only and does not constitute any investment or trading advice. Markets carry risk; decisions require caution.

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