Optionality in Bear Markets

A lot of investors talk about optionality in bull markets. Cash is abundant and optionality is an easy crutch for justifying high valuations. When bear markets come, the talk of optionality ends.

Why This Makes Sense?

The number one priority is always stay alive. When shit hits the fan, you need to above all else live another day. To me, this is why everyone stops talking about optionality during bear markets. Does this make sense?

The Bull Case for Bear Market Optionality

The whole point of optionality is that it should be low cost! If the cost of optionality is putting you under, you have bigger problems.

Furthermore, attacks on a business span time. When you stop investing in asymmetrical risk, you expose yourself to disruption in the future.


Many people oscillate thought processes, depending on the stage of the market we are in. To me, this seems like a disaster in the making. I believe in learning lessons slowly. Too many people are a product of the times instead of searching to be timeless.

I still love optionality and believe it helps companies transcend market cycles, but like anything else, you need to find the truth. Optionality shouldn’t be a crutch to support a high valuation when the majority of time you can get it where it isn’t priced into the stock.

Author: fatbabyfunds