Stock market crash: how to stay calm when share prices are falling

One thing I always stress whenever stocks are falling is it’s important to stay calm. When you’re calm, you’re more likely to make rational long-term investment decisions.

© Provided by The Motley Fool Young woman sat at laptop by a window

But let’s face it, staying calm is not always easy during a stock market crash. When share prices are falling sharply – as they have been over the last month due to the coronavirus – and the balance of your investment portfolio is shrinking at an alarming rate, it can be a very stressful time.

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There are a few things you can do to ease the stress, however. Here are three things I do to stay calm when the stock market’s in meltdown.

Look at the opportunity

The first thing I always do is think rationally, and look at the long-term track record of the stock market. I remind myself that investing is a long-term game, and that stocks have crashed many times in the past and always recovered. 

I also ‘reframe’ the situation. Instead of focusing on how much money I’ve lost (on paper) as share prices have declined, I look at the lower share prices on offer as a buying opportunity (I believe there are some great buying opportunities now, by the way). This helps me stay calm and stick to my long-term investment strategy.

Limit portfolio monitoring

The next thing I do to stay calm during a stock market crash is limit the number of times a day I check my portfolio. In my experience, checking your portfolio constantly when share prices are falling is just one way to drive yourself crazy. The more you check, the more stressed you tend to become. If you want to reduce your stock market-related stress, monitoring your portfolio less regularly is a good idea.

Step away from it all

Finally, when stocks are crashing, I like to do things that will take my mind off the markets. For example, I’ll turn off my smartphone (receiving constant updates in relation to stock market movements generally doesn’t help to  stay calm during a stock market crash) and go for a run. Or, I’ll hit the gym (although this may not be a good idea in the current environment). Taking my mind off the stock market helps me to relax and puts me in a better frame of mind to make rational investment decisions.

Ultimately, the key to surviving a stock market crash is to think long term, and not get too caught up in the chaos of it all. It’s never easy when share prices are falling, however, if you have a long-term view, you should be okay. 

If you’re looking for more information on how to manage the current stock market crash (and take advantage of it), you’ll find plenty of excellent information here at The Motley Fool.

It’s ugly out there…

The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.

And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.

Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)

Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…

Download a FREE copy of our Bear Market Survival Guide today and discover the five steps you can take right now to try and bolster your portfolio… including how you can even aim to turn today’s market uncertainty to your advantage.

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Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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