The Singapore stock market has risen steadily in the nine years since hitting a low in March 2009, albeit with ups and downs along the way.

Some forecasters expect the uptrend to continue, but market upturns rarely last this long, so other market watchers believe shares could plummet before long.

How then do you prepare for a downturn?

Certainly, this market rise has been exceptionally long. The average age of a bull market is 57 months (close to five years), Fortune magazine noted, and the longest — from October 1990 until March 2000 — lasted less than 10 years.

When a rising “bull market” turns into a falling “bear market”, where prices drop more than 20 per cent, the impact can be huge.

After rising 417 per cent through 2000, for instance, the stock market in the United States dropped spectacularly during the dot-com bust in 2000.

In another example, the stock market in Singapore reached a record high of 3,876 in October 2007, but dived to 1,457 points in March 2009.

“No bull market has ever made it to its 10th birthday,” Fortune observed.

While it could be different this time, investors would be well advised to be prepared for a downturn.

As Ms Selena Ling from OCBC bank’s head of treasury research and strategy said recently, a “grey rhino” event — a risk that investors are familiar with — could move with surprising speed.

Whether the change is due to rising inflation or the withdrawal of liquidity by central banks or something else, a downturn could happen quickly.

To be prepared, start by making a plan for your financial goals. If you don’t have a plan, create one that identifies your objectives as well as how much you need to meet them.

Forbes contributor Rob Berger explained that the goal is to have in place an investment plan that you can stick with during a down market. “It’s during a bull market that we should ensure that our asset allocation is both realistic and aligned with our financial objectives.”

A STRATEGY THAT WON’T GIVE YOU THE JITTERS

If you need funds soon to pay your children’s education or other expenses, for instance, keep that money in a time deposit or money market fund. If you will only need larger sums for something further away, such as retirement, you can keep your money invested.

For the funds that you invest, investment firm Fidelity suggests having a strategy that works for you. “Even if your time horizon is long enough to warrant an aggressive portfolio, you have to be comfortable with the short-term ups and downs. If watching balances fluctuate is too nerve-racking, think about re-evaluating your investment mix to find one that feels right. But be wary of being too conservative, especially if you have a longer time horizon, because strategies that are more conservative may not provide the growth potential you need to achieve your goals.”

Investors should also diversify among stocks, bonds, property and other types of assets to minimise the impact of any downturn. Examine individual shares and bonds to make sure they are invested in strong companies as well, and ensure that exchange-traded funds (ETFs) or other assets are strong. It is also important to make sure there is not too much exposure to a single industry.

WATCH YOUR EMOTIONS WHEN THE ‘BEAR’ COMES

When the bear market does arrive — and it will happen eventually — it is important to remain calm.

“Remember you’re in this for the long-haul,” Motley Fool Australia contributor Regan Pearson noted. “The cost of superior long-term returns from owning shares is short-term volatility. In the years ahead, good businesses will keep growing, keep generating cash, and keep paying out dividends.”

Consider holding on to your assets. Perhaps the worst thing an investor can do is sell based on short-term changes.

Of course, holding on is easier said than done. “All the academic research shows that emotions have a significant influence on investor behaviour and how we make decisions,” personal finance expert Jason Butler wrote in Financial Times.

“Research also shows that we are twice as sensitive to financial losses as we are to making gains and so, given a choice, we would much prefer to avoid losses than to seek returns.”

These emotions mean that investors who are not adequately prepared may sell in a panic and lose money.

Instead of selling in a panic and losing money, keep the big picture in mind and know that having a diversified portfolio means you can stay calm when volatility rises. If you have planned well and can meet your short-term spending needs, you can take a long-term perspective and take advantage of the downturn.

Ultimately, being prepared means that you can use the bear market to invest in good companies at cheap prices, when everyone else is running away. If you have identified a list of top-quality companies you want to own and keep some cash on hand, you can buy them when prices drop.

By being well-prepared and having an investment mix you are comfortable with, a drop in the market can be turned to your advantage rather than causing the concern that others might have to endure.