Freaking Out About the Stock Market? Read This

Photo by Elnur / Shutterstock.com

If you think the recent stock market correction is terrible, you’re right. Watching your net worth decline by close to 20% in a couple of weeks is no walk in the park.

But take a brief walk with me down memory lane and look at a bit of my work history. Maybe it can provide a little perspective that will help you make better decisions.

When I became a stockbroker in 1981, mortgage interest rates were around 17% and insured money markets paid 20%. Nobody was buying stocks.

During my first year in the business, the market dropped more than 20% — and that was just the first of several corrections and bear markets I’ve seen while working on Wall Street and in personal finance:

  • I was still a stockbroker in 1987, when the market plummeted nearly 23% in one day: Oct. 19, 1987, otherwise known as Black Monday.
  • I was offering market commentary on the Cincinnati Fox affiliate during the dot-com crash of 2001-2002, when the Nasdaq composite index fell by around 76%.
  • I was offering market commentary on the West Palm Beach ABC affiliate on 9/11. On the first day of trading after the market reopened, it fell about 7%.
  • I was working right here at MoneyTalksNews.com when the Great Recession struck. From Oct. 9, 2007 to March 2009, the market lost around 50%.

And now here I am, nearly 40 years later at the age of 64, watching my retirement savings get sliced by 20% in less than two weeks.

So, what have I learned from these decades of periodic financial carnage?

One thing I’ve learned is the U.S. economy and stock market are resilient. When I started as a stock broker in 1981, the Dow Jones Industrial Average was at about 1,000 points. Until this recent pullback, it was approaching 30 times that level. Despite all the setbacks, good things come to those who wait.

Another thing I’ve learned: Don’t try to time the market. Even when I see potential trouble ahead, I’m not smart enough to get out at market tops and back in at bottoms. So, staying invested, at least partially, is the only strategy that makes sense.

Finally, I’ve learned that when you’re freaking out and the urge to sell becomes nearly irresistible, you’re probably approaching the time to buy. From an article I wrote called “The Golden Rules of Becoming a Millionaire“:

“The cyclical nature of our economy all but ensures bad times will periodically occur, and human nature all but ensures that when bad times happen, most people will freeze like a deer in the headlights. But downturns are the time you’ve been saving for.

If you think the world is truly ending, buy canned food and a shotgun. If not, step up. As billionaire investor Warren Buffett famously advised, ‘Be fearful when others are greedy and greedy when others are fearful.'”

That’s why I was buying in the depths of the Great Recession and why I’m currently putting together a shopping list.

Bottom line? I wish I knew how to protect you, and myself, from wicked market corrections like this one. Alas, I can’t. But I can offer you the following time-tested advice:

  • Buy when things look like they can’t get worse. (That isn’t now. Things can definitely get worse from here and, in my opinion, likely will.)
  • Unless you must, never sell when market declines are leading the news.
  • If you end up selling during declines because you can’t emotionally or financially deal with a decline, that’s proof you had too much money in the stock market. Learn from that mistake and don’t repeat it. (Here’s my advice on how much to have in stocks.)
  • Pay attention to the news, but not too much. Be interested, but not obsessed.
  • Both declines and recoveries last longer than you think they will. Patience pays.
  • Listen to experts, but not blindly. Nobody’s right all the time and nobody knows the future.
  • Always keep some money on the sidelines. You never know when the bargain of a lifetime might present itself.

So, there you go. Sorry I don’t have a magic bullet, but if you follow this advice, you’re almost guaranteed to be a successful investor. It’s been working for me for 40 years.

What’s your take on this news? Share your thoughts by commenting below or on the Money Talks News Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
8 Surprising Things No One Tells You About Retirement
8 Surprising Things No One Tells You About Retirement

Knowing what to expect can help you prepare for — and adjust to — life in your golden years.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

7 Social Security Blunders That Can Ruin Your Retirement
7 Social Security Blunders That Can Ruin Your Retirement

Making even one of these mistakes can easily cost you tens of thousands of dollars.

15 Ways Retirees Can Make Their Savings Last Longer
15 Ways Retirees Can Make Their Savings Last Longer

Study these strategies to make your golden years gleam.

8 Things You Should Never Put in a Microwave
8 Things You Should Never Put in a Microwave

A microwave can be a busy cook’s best friend. But heating certain things in a microwave can cause disaster.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

Why Your Next Stimulus Check Might Be Bigger Than You Expect
Why Your Next Stimulus Check Might Be Bigger Than You Expect

Your third coronavirus payment will be the biggest yet — and possibly even bigger than you realize.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.