The headlines are screaming. The numbers on the screen are all red. The value of your portfolio, which you’ve been dutifully building, has dropped. Your stomach sinks.
Every instinct in your body is shouting at you: “DO SOMETHING! Sell! Get out before it goes to zero! Stop the bleeding!”
This feeling is a primal, fight-or-flight response. It’s perfectly normal. It’s also the single most destructive impulse you can have as a long-term investor. Resisting this one impulse is what separates successful investors from everyone else.
So, when the market is crashing and panic is in the air, here is your expert guide on exactly what to do.
The Guide: A Step-by-Step Plan
Step 1: Do nothing.
…That’s it. That’s the guide.
Okay, it’s a little more nuanced than that, but not by much. Let’s break down why the most powerful action you can take is no action at all.
Reframe Your Brain #1: A Loss Isn’t Real Until You Sell
Right now, the loss you see in your portfolio is just “on paper.” It’s a temporary fluctuation. Nothing is permanent yet.
The only way to make that temporary, paper loss a real, permanent loss of your money is to hit the “sell” button.
Selling in a panic is the financial equivalent of running out of a building during an earthquake. The safest place to be is inside, waiting for the shaking to stop. Selling guarantees that you lock in the absolute bottom and will miss the eventual recovery.
Reframe Your Brain #2: The World’s Greatest Store is Having a Sale
Imagine your favorite clothing store announced a 30% off, store-wide sale. Would you panic? Would you rush to get rid of the clothes you already own?
Of course not. You’d be excited. You’d see it as a great opportunity to buy that jacket you’ve been wanting at a much cheaper price.
A stock market crash is a sale.
The high-quality, diversified investments you’ve been buying are now available at a discount. Every automatic contribution you make when the market is down buys you more shares than it did a month ago. You are getting more ownership for the same amount of money.
When you reframe a market crash from a “catastrophe” to a “discount,” your entire mindset shifts from fear to opportunity.
Your “Market Crash” To-Do List
If the urge to “do something” is overwhelming, then channel it into this productive list:
- Log Out. Stop checking your portfolio every hour. It’s like poking a bruise. If you have to, delete the brokerage app from your phone’s home screen for a week. Your long-term plan doesn’t need daily supervision.
- Trust the System. If you have automatic investments set up, let them run. Feel good knowing that your automated system is doing the smart thing for you: buying more assets while they are on sale.
- Zoom Out. Go look at a chart of the stock market for the last 100 years. You’ll see terrifying dips for World Wars, financial crises, and pandemics. You’ll also see that after every single dip, the market has recovered and gone on to reach new all-time highs. History is on your side.
- Do Absolutely Nothing Else. Don’t sell. Don’t pause your contributions. Don’t change your strategy. Stick to the plan.
This is the core of the “boring is rich” philosophy. Your wealth is built by the system you create and your discipline to let it work, especially when it’s hardest.
