Whenever I feel that the stock market is about to go into a bear market, I would run a stress test on my portfolio. The method I use is Value-at-Risk (VaR), which measures the amount of loss at a certain confidence level or probability of occurrence. For example, a VaR at 99% confidence level (which is equivalent to 1% probability of occurrence) of $1,000 would mean that the loss would not exceed $1,000 99% of the time. VaR has a holding period tagged to it, such as daily, monthly or yearly. A daily VaR at 99% confidence level (henceforth written as "VaR@99%") of $1,000 would mean that the loss for any one day would not exceed $1,000 99% of the time. As losses could accumulate over time, the longer the holding period, the larger is the VaR for the same confidence level. Assuming that share price changes follow a normal ...