Soldiers often talk about the fog of war.

In the middle of heavy losses and fear, they can't see where they are going. The origins of this phrase are traced to a Prussian military analyst Carl von Clausewitz who once wrote, "War is the realm of uncertainty; three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty."

Do you feel this way as an investor in a bear market?

Here are five critical tips to help guide you through the bear market fog.

#1 - Don't get caught in bull traps.

Let's call the rally earlier this week what it was: a bear market rally. And it won't be the last one. Bitcoin rallied nearly 25% after nosediving to $17,700... and now it has dropped roughly 10% again.

We will see this type of price action again.

In fact, face-melting rallies are a common trait of bear markets.

Frankly, I think the current crypto crash is most comparable to the 2000-01 Dotcom Crash. New technology, crazy speculation, and a major crash... but the underlying tech really is a big deal.

During that crash, the NASDAQ fell from its peak of 5000 all the way down to 1400. That's a 70% drop!

But, along the way, there were FOUR rallies larger than 25%!

The point is this: don't get caught in a bull trap. Looking ahead from June 2022, there will be more quantitative tightening, continued economic slowdowns, and higher energy/food prices. There is also no end in sight to the war in Ukraine, China's crazy zero COVID policies, or the domestic ESG public policies that are exacerbating our energy crisis.

The S&P 500 is only down about 20% from its ATH right now. Past recession market data suggests we're not at the bottom yet in equities.

Furthermore, there's no reason to believe that crypto won't continue to stay positively correlated to the equity markets.

#2 - Hold cash or pay down debt.

Unfortunately, the oppressive macro environment means that investment options are limited. Bonds, equities, crypto, real estate...nearly everything got crushed in recent months.

So, as we look to the future, what is a safe haven?

The energy sector may continue to see gains and there are other niche equities that may be good plays.

But for most retail investors, the volatility and unpredictability of what's ahead will make any spot-long investment strategies difficult.

It is the view of myself and others that paying down debt and/or holding cash as dry powder are likely the best plays for most investors.

Why?

Nearly all investments may go down in this environment and, in the event that the economy takes and your business/career takes a hit, you want to reduce your cash burn.

That's what I'm doing. And I wish I did it earlier. But, I guess I'm not alone with this regret.

#3 - Follow & learn from trusted sources.

Now is the time to learn new skills and better understand markets.

You can't do that on your own.

Here are a few to get you started:

1. @Apompliano: follow Pomp's podcast for some of the best interviews in business and crypto. He will keep you in touch with macro environment, Bitcoin news, and some of the most innovative businesses.
2. @42macroddale: I've followed macro investor Darius Dale for the last year or so and he's nailed nearly everything with better, earlier timing than anyone else I've seen. He called the drawdown in December, the rally earlier this year, the slowing economic growth... I mean, I don't know what you're doing if you're not following him. He is methodical and relentless.
3. @LynAldenContact: she has a better handle on the energy sector and macro history than anyone else on Twitter.
4. @tbr90: crypto investor Tyler Reynolds is an OG in crypto and a well-informed investor. He's issued some of the most salient warnings and investment theses this year including reservations about Terra, early concerns over macro environment, and frequent warnings about large crypto drawdowns. He'll also help you find early investments like Pollen.
5. @BanklessHQ: they consistently have some of the best guests on their podcast in all of crypto. However, beware: they are ETH maxis. They claim they are decentralization maximalists... but, their belief in Ethereum as the only unquestionable winner in this category blinds them to its shortcoming (don't forget, I like Ethereum too).
6. @JimBiancoResearch: he's all over everything macro and is a reasonable voice who often draws attention to issues other people are ignoring on Crypto Twitter (for example, the JGB crisis).

BTW -- for more Twitter follow suggestions, see my piece on The Best Sources to Follow on Crypto Twitter.

#4 - Don't throw crypto out with the bath water.

Sure, 95% of the tokens were scams, ponzis, memecoins, bad investments, ripoffs, terrible ideas, and worthless NFTs.

Don't let your disgust for the bad investments make you forget what's really happening.

Crypto is a new, revolutionary technology that will change the way we organize ourselves in society.

As Ken Seiff, General Partner at Blockchange Ventures, put it while on a Pomp Podcast episode, "The internet allowed any two entities to exchange data in a frictionless way... the blockchain was simply changing one word: its any entity exchanging value with any other entity in a frictionless way."

Don't lose sight of this.

#5 - Bear markets are when you find winners.

Scared of the drawdowns? Head spinning from the losses?

Chin up.

This is when you find winning investments.

The businesses and investors that survive the fog of a bear market are ready for serious gains when blue skies return.

We aren't deploying capital right now. But we are continuing our research and creating a shopping list for when the time is right.

You might find it beneficial to do the same.

"[Sequoia Capital] looked at all their investments over the course of their almost forty year history and they came to a shocking conclusion: every single one of their top twenty investments came during a recession. Uber in 2008-2009, Apple was 1982 or 1983, Google was 2000... you go through it all. So, if you consider yourself a student of the game in venture, then these moments should be a moment where you lean in, dial in, and do your best deals." - Ryan Zurrer, Founder/Managing Director at Dialectic AG, speaking with Tommy Shaughnessy on The Delphi Podcast.

Closing TLDR

1. Don't get caught in bull traps. In bear markets, the rallies are often face-melting. We aren't buying much of anything until something changes in macro.
2. Hold cash or pay down debt. This is probably the best play for most retail investors and its the primary strategy we are using right now with our own portfolio.
3. Follow & learn from trusted sources. You need guides to help you through the fog of war. We are relying on people like Darius Dale and Tyler Reynolds to share
4. Don't throw crypto out with the bath water. You may be disgusted with crypto disasters like 3AC or licking some serious wounds right now (like we are). But crypto is still revolutionary. Don't lose sight of that.
5. Bear markets are when you find winners. All of Sequioa Capital's winners were found in bear markets. Keep researching and identifying winners for when the time is right to deploy capital.