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What to Do When the Stock Market Is Crashing

Stock market crashes can be terrifying for investors, especially when you have a large allocation of your investment portfolio in the stock market.

This guide will cover all the right and wrong moves for when the stock market crashes and give you the confidence to execute the best investment strategy possible.

Between 2020-2022, I made over 35% returns by following these tactics in the volatile stock market crash resulting from the Covid pandemic.  Previously in 2008-2009, during the great recession, I was a floor trader on the New York Stock Exchange and made millions a day for my firm by understanding the dynamics of liquidy and fear.

A market crash is when stock prices rapidly decline across a broad market or sector.  A market crash is usually caused by new data or information suggesting the economy is distressed.

What Is A Stock Market Crash?

Often a knee-jerk reaction causes a sudden drop because investors and traders assume that all companies will suffer. However, not all companies are created equal, and most often, in a stock market crash, the baby gets thrown out with the bathwater.

Before you start worrying about company-specific valuations or economic signals, consider this: most of the errors made in a crash have nothing to do with technical models or investing strategy.  Almost all the challenges and mistakes come down to psychological and behavioral decisions.

What Do I Buy?

How Long Does A Market Crash Take To Recover?

Corrections are often caused by temporary fears that can have an immediate sudden drop in the market.  Causes could be anything from a military threat to an economic sanction or even a surprise economic data point that catches investors off guard.

Corrections (Dips)

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