The Market is Crashing - Do This

It’s a blood bath out there.

At this point you might be debating selling it all and moving to that rural cabin in the middle of Alaska.

Or maybe you haven’t even checked your portfolio this week.

(If this is you, don’t look at it now)

What have I been doing?

Recent buys for me are QQQ and VTI.

I have also added to a few existing stock positions, Facebook and Block (previously known as Square).

If you have seen the stock chart for either of these two you know it’s not pretty. Though they are hacking away at my portfolio, I have begun to add small amounts to lower my average cost.

I believe these companies will come out on top in the next 5-10 years.

That said, seeing your portfolio in the red is never easy.

Here’s a few tips to not lose your dollar, or your mind in volatile markets.

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“You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch

Recognize the Current State

Stocks are falling.

Your 401k has likely decreased a little bit.

Even though you are seeing your dollars magically disappear it’s important to realize market downturns happen.

Take a look at the chart below and it’s probably easy to conclude the last year or two has been the Mania Phase.

After seeing the NASDAQ down -5% the other day I’d almost argue this is the capitulation point, at least that’s how I felt.

Truth is, no one knows where we are on this graph.

The lesson here is to realize the market goes through cycles.

Realize it’s all part of the game.

How Do You Feel

Take a step back and recognize how the market is influencing your day to day thoughts.

Are you worried about your portfolio, or constantly checking your brokerage account?

Debating whether you should sell out of certain positions?

Pullbacks are a great time to analyze your behavior as an investor and be critical on what you actually want from your investments.

Stick To Your Strategy

Market pullbacks can make people do really dumb things.

It’s easy to say you will hold through a dip when your investments are at all time highs.

When you see one of your individual stocks fall 25% in a day, *Facebook cough cough*, it becomes much more challenging to maintain that mentality.

Ensure you can stick to your strategy when the going gets rough.

Conclusion - Evaluate Your Investing

Tough times in the stock market provide a great opportunity to analyze your investing.

Maintain a long term mindset and take note of areas to improve on.

And as Peter Lynch said, “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”

(Don’t forget the memes below)

Having a solid financial foundation makes dealing with volatile markets much easier.

My friend Kenny has put together a great guide to help you master your investments so when red markets come, you can weather them like a pro.

Inside he covers:

• What index funds are

• The magic of compound interest

• The importance of costs and fees

• How to calculate your retirement number

• Different investment accounts (401k, HSA, Roth IRA)

And that’s just the beginning…

Learn the methods of generating real long term wealth.

Click the button below to get started.

(counting this as a meme)

Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you soon!