Don’t Panic! How to Keep Calm During a Stock Market Downturn

The stock market can be a rollercoaster—exciting on the way up and stomach-churning on the way down. When prices drop and headlines start screaming about crashes, it’s easy to feel that sinking feeling in your gut and wonder, “Should I pull everything out now before it gets worse?”

Before you do anything drastic, take a deep breath. Market downturns are part of the ride, and with a little perspective and a few smart actions, you can keep your cool and avoid making mistakes that could cost you in the long run. Here’s what to do when the market gets rough.

Pause Before You React

When the market drops, your first instinct might be to sell. But that knee-jerk reaction is often the worst move. The truth is, selling when the market is down locks in your losses. The market has always recovered from downturns—every single one in history.

Before making any decisions, give yourself time. Wait at least 24 hours (if not a few days) before acting. That small pause can make a big difference between reacting emotionally and responding wisely.

Remind Yourself: This Has Happened Before

Market downturns are not rare. In fact, they’re normal. On average, the market drops by 10% (a “correction”) every year or two. Bear markets (a 20% drop or more) happen about every 5–7 years.

But here’s the kicker: after every single downturn, the market has eventually bounced back—often stronger than before. If you need proof, just look at history:

  • After the 2008 financial crisis, the market more than tripled over the next decade.

  • After the 2020 pandemic crash, the market recovered in record time.

So when the market dips, it’s not the end of the world—it’s part of the cycle.

Focus on the Long Term

Unless you’re retiring next week, your investment timeline is probably years—or even decades—long. Over time, the market trends upward despite short-term volatility.

Think of investing like planting a tree. You wouldn’t dig it up every time it rained, right? You’d leave it in the ground, water it, and let time do the work. Same with your investments.

So instead of focusing on what your portfolio is doing this week, zoom out. Where will it be in 10, 20, or 30 years? That’s what really matters.

Tune Out the Noise

Financial news thrives on drama. “Markets Plunge!” makes for a great headline. “Markets Stabilize” … not so much.

During a downturn, it’s easy to get sucked into the 24/7 news cycle and social media panic. But most of that noise doesn’t actually help you make better decisions. It just adds to your stress.

If watching the news makes you anxious, take a break. Go for a walk, read a book, or do anything that reminds you there’s a world outside of the stock market.

Check Your Diversification

When the market is down, a well-diversified portfolio is your safety net. Diversification means spreading your money across different asset classes—stocks, bonds, real estate, international investments—so that one bad market doesn’t tank everything.

If you’re feeling extra nervous, it might be a sign to review (not overhaul!) your portfolio. Are you too heavy in high-risk investments? Is your mix aligned with your risk tolerance and goals? A financial advisor or robo-advisor can help you rebalance if needed.

Remember Why You Invested

Every investment should be tied to a goal. Maybe it’s retirement. A house. Your kid’s education. Those goals haven’t changed just because the market dipped. So why should your strategy?

Revisit your original plan. Remind yourself of your goals and the time horizon for each. If your goals are still the same, there’s no reason to change your investments just because the market is throwing a tantrum.

Keep Investing (Yes, Really!)

It may sound counterintuitive, but downturns are actually a great time to invest—if you can afford to. Think of it like stocks going on sale. You’re buying at lower prices, which means more potential growth later on.

This is where dollar-cost averaging comes in. That’s when you invest a set amount at regular intervals (like every paycheck), no matter what the market’s doing. It takes emotion out of the equation and helps smooth out your returns over time.

Don’t Check Your Balance Every Day

If you constantly refresh your portfolio and see red numbers, of course you’re going to feel anxious. But here’s the thing: unless you’re withdrawing money today, those losses aren’t “real.” They’re just numbers on a screen.

Limit how often you check your investments. Once a month—or even once a quarter—is plenty for most long-term investors. You’ll save yourself a ton of stress.

Talk to Someone You Trust

Sometimes it helps just to talk it out. Whether it’s a financial advisor, a money-savvy friend, or your partner, sharing your worries can help you see the situation more clearly.

An advisor, in particular, can help you stay grounded. They’re trained to help you stick to your plan and avoid rash decisions that could derail your progress.

Learn From the Experience

Every downturn is a chance to learn more about yourself as an investor. Did you panic more than you expected? Did you feel underprepared?

Use that insight to make changes going forward. Maybe you need to:

  • Adjust your asset allocation

  • Build up your emergency fund

  • Educate yourself more about how markets work

The goal isn’t to never feel nervous—it’s to be ready despite the nerves.

Final Thoughts: Stay the Course

Market downturns are never fun. But they’re also not the time to panic and undo all your hard work. By staying calm, sticking to your plan, and thinking long-term, you can come out stronger on the other side.

Remember: investing is a marathon, not a sprint. Some miles will be tough. But if you keep putting one foot in front of the other—and don’t quit when it gets hard—you’ll reach your destination.

So take a deep breath, step back from the noise, and trust in the power of time, consistency, and good planning.

You’ve got this.