The stock market is a volatile system that fluctuates regularly. The stock market trends will more often than not create fluctuations. While this can seem scary, especially for individuals that have just recently started investing in stocks, this is entirely normal. As you watch the market on its rollercoaster ride and keep an eye on your portfolio, here are some things you will want to do when the stock market drops.
Take a Deep Breath
The market diving is not unusual, but seeing your portfolio lose thousands of dollars in a matter of minutes can make it seem like the end of the world. Turn off the TV, stop scrolling through the headlines popping up on your phone, step back, and take a deep breath. Despite what financial news sources speak about the impending doom of the market, the market activity is not uncommon. The media is driven by ratings and clicks, so the scarier they sound, the more traffic they will receive.
Buy More Stocks
While buying new stocks may be the last thing on your mind, buying stocks when they are low and selling them when they are high its the name of the game. When the stock market dives, you can take advantage of buying stocks at a much lower price.
Don’t Panic and Sell
The stock market is volatile by nature, and there will always be times of highs and lows. The market will reward those will discipline and patience, so avoid the natural reaction to sell and lose out on your long-term investments. Particularly for investors that are looking to retire in the next few years, resist the temptation to sell your stocks in exchange for bonds. You could be looking at 30 years of retirement ahead of you, so you will want your stocks to have the exposure of long-term growth.
The market will consistently make corrections, making dips every so often. A drop in the market can throw you off your game but aim to stay focused on the long-term. Think like an investor, not a day trader. Investors take a step back and see what opportunities they can take advantage of, unlike day traders that sell at the sign of bad news. Keep your head in the game and your eye on the prize of your long-term investment.