What do most people probably think about when they hear that the stock market is dropping or that it might become a bear market? 
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They might think about slowing markets, economic troubles, higher levels of unemployment, loosing money, and past bear markets like that of the 2008-2009 market crash.

Thinking about how much damage can come when the market drops, it might seem like a bear market or a pull-back couldn't possibly be a good thing. The truth though, is that drops in the market are a part of the game.

And the thing is that there are always ways to set yourself up for success, even when the market is moving down.

Think about this... If I had $1,000 to invest and wanted to buy shares in company XYZ, which has been trading around $10 per share​, I could buy 100 shares. 
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​If I had done my financial analysis of company XYZ, if I had looked at its PE ratio, EBITDA, and all the other financial ratios, earnings forecasts, and financial data... If I had looked at its technicals and I thought that over the next 3 years, the stock could move up and would be a strong investment, then I would be happy to buy those shares at $10 per share. 

In this case, I would be able to buy 100 shares ($10 per share * 100 shares = $1,000). 

Now let's say that the stock market dropped into a bear market before I bought those shares. The S&P 500 moved down 20% into a bear market, and the stock I was watching dropped with it. 
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​Now, if I had been watching for a good entry into my stock, I might consider buying it when the market started moving back up and it seemed like the bear market might be about to end. 
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​At that point, I could buy my shares of XYZ company, but now they would only cost $8 per share instead of $10 per share. That means that with the same $1,000 I had to invest I could buy more shares. 
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​I could now buy 125 shares instead of the original 100 shares ($8 per share * 125 shares = $1,000). 
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​Let's look at the difference of what that lower buy price per share could mean in that investment, assuming a quarterly dividend of $0.10 per share (that is 1% per quarter at $10 per share, which is a resonable dividend yield that is not particularly high or low). Let's also assume that after I buy those shares and the market has dropped, I hold them for the next 3 years and there is a 10% price growth rate for each of those 5 years. 

So the question is how much of a difference does this make over the course of the 3 years.

In the scenario where I bought before the drop, my stock is still positive. I spent $1,000 to buy it, and it is now worth $1,064.80. I also collected $120 in dividends over the 3 years. In total, I made $184.8, which represents a return of 18.48%. 
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​When I bought after the drop, my stock was worth more because I bought more shares. I spent $800 to buy it, and it is now worth $1,331. I also collected $150 in dividends over the 3 years. In total, I made $681, which represents a return of 85.125%. 
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​You can see how waiting to buy my investment until after the market dropped helped me get higher returns and make more money in total over the 3 years in this example. 
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​Of course, in real life it is often hard to predict exactly when bear markets will begin or end, but this concept can still be helpful when investing. One way to use this concept of buying your stock cheaper when the market drops is by doing what's called dollar cost averaging. 
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​Dollar cost averaging basically means investing the same amount of money every month no matter what the stock price is, or at the very least, when the stock is dropping. This strategy can help investors to take advantage of times when the market moves down without having to try and time the market perfectly. 
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​I talked about this idea in the video below and looked at some real life examples of how stocks dropping with the market could allow investors to buy them at a discount. If you want to see how these ideas might look on real life charts, check out the video here:  

I hope you can see now how bear markets or drops in the stock market don't have to be a bad thing. Hopefully you can see how it can actually be good to see the market drop and how bear markets can create fantastic opportunities for investors to buy more stock at a lower price. 
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​Happy Investing!