Thursday was ugly. The Nasdaq dropped 5.5% and closed in correction territory, more than 10% below the record it set Oct. 6, Reuters reported.
The S&P 500 fell 4.4%, and the Dow lost 1,833 points, according to The Associated Press. CNBC noted that all three indexes posted their biggest one-day drops since April 2025.
The trigger was a fear that Democrats’ midterm wins could slow the buildout of AI data centers. (If you missed it, here’s our take on how the midterms could affect your 401(k).)
I own several of the big tech stocks caught in this selloff. Microsoft, Google, Meta and Nvidia, which I’ve owned for many years, have made me hundreds of thousands of dollars. Even so, watching Nvidia fall about 9% on Thursday, wasn’t fun.
When you watch that much money evaporate in one afternoon, your stomach notices. Mine did.
So what am I doing about it? Not much — and that’s the point. I’ve been investing for 45 years and have made millions in the market. I’ve learned that what you do on a day like this matters far less than what you did before it.
Here’s what I’m doing now, and what I’d suggest you do, too.
1. I’m not surprised — trees don’t grow to the sky
This drop wasn’t really unexpected. Earlier this year, I wrote that trees don’t grow to the sky. Stocks don’t climb forever, either.
Look at what we’ve had. The S&P 500 gained about 24% in 2023, 23% in 2024 and more than 16% in 2025, according to CNN. Three straight years of double-digit gains? Since the 1940s, that’s happened only six times.
The stocks leading that charge, especially the ones tied to artificial intelligence, ran up even faster. When something climbs that far that fast, a correction isn’t a shock. It’s the bill coming due.
And corrections are common. According to Capital Group, the S&P 500 has fallen 10% or more roughly once every year and a half since 1954. If you’ve been investing for more than a few years, you’ve almost certainly lived through one.
I covered this the last time stocks tanked, too, in a short video: I’ve Been Investing for 44 Years: Here’s What to Do When the Market Is Tanking. The advice hasn’t changed.
2. I’m lowering my expectations, not my stock exposure
After three monster years, I don’t expect the next few to look the same. So I’m penciling in smaller gains for a while — maybe much smaller.
What I’m not doing is selling. Lowering my expectations costs me nothing. Dumping good companies after a 10% drop could cost me plenty, because I’d have to be right twice: once when I sell, and again when I buy back in.
In 45 years, I’ve never met anyone who’s consistently good at that. Not me, and not the pros.
On Monday, Morgan Stanley’s strategists said the market pullback that started in June was in its “final innings,” according to Reuters. Three days later, the Nasdaq had its worst day in 19 months.
Meanwhile, strategists at the Macro Research Board warned Thursday that the AI selloff could keep going for a while yet, CNBC reported.
One big firm says it’s nearly over. Another says it’s far from over. If the experts can’t agree, why would you bet your retirement on either one?
3. If you’re freaked out, you own too much stock
Here’s the test I’ve used for decades. If a day like Thursday has you losing sleep, the problem isn’t the market. The problem is how much of your money is in it.
My rule: Money you’ll need in the next five years doesn’t belong in stocks. Not your down payment, not next year’s tuition, and not the cash you’ll live on in the first years of retirement.
The Securities and Exchange Commission makes the same basic point. Its investor education site notes that if your time horizon is short, you may want investments that don’t swing as wildly.
Money you’ll need soon should sit somewhere boring, like a high-yield savings account or a CD. You can compare current savings and CD rates in our Solutions Center.
When I was a stockbroker, I told clients that no return is worth losing sleep over. I still believe it.
Quick thought — most financial “gurus” got rich selling advice, not following it. I’d rather show you what actually works, because I’ve lived it. Sign up for the free Money Talks Newsletter for money advice from someone who takes his own. 10 seconds, no spam.
4. Know how long these things usually last
Nobody can tell you when this one ends. But history can tell you what’s normal.
Capital Group data going back to 1954 shows S&P 500 declines of 10% or more have lasted an average of 135 days from high to low. That’s about four and a half months.
Deeper drops are rarer and last longer. Declines of 20% or more — bear markets — have come roughly every six years and averaged 402 days. That’s a little over a year.
The tech-heavy Nasdaq is choppier still. A 2024 Reuters analysis of LSEG data found it has slipped into a correction after a new high roughly every two years.
Keep some perspective, too. Even after Thursday’s beating, the S&P 500 is still up 7.4% this year, and the Nasdaq still shows a 4.6% gain, according to Reuters.
If you’re close to retirement, our recent story on what a 20% to 30% Nasdaq drop could mean for your retirement accounts shows which accounts have the most riding on tech.
5. Check what you actually own — then rebalance, don’t run
This is the step most people skip. Pull up your 401(k) and IRA statements and look at what’s really inside your funds.
The SEC suggests checking your funds’ top holdings to make sure you’re as diversified as you think. Do it. AI chip stocks are now among the biggest companies on Wall Street, so they carry a lot of weight in index funds that track the whole market.
In other words, you might own a lot more Nvidia than you realize, even if you’ve never bought a single share.
Then rebalance. The SEC’s example: Say you started with 60% of your money in stocks, and market gains pushed that to 80%. Rebalancing means trimming back to your target, selling some of what’s risen and adding to what’s lagged.
As the SEC points out, that makes you sell what’s gotten pricey and buy what’s gotten cheap. Some experts suggest doing it once or twice a year.
That’s not panic selling. Panic selling is dumping everything because the news is scary. Rebalancing is a plan you set in advance, and it works whether the market is up or down.
If you’d rather have a pro help, here’s a place to find a financial advisor. Ask whether they’re a fiduciary, legally required to put your interests first. And for more on the errors I see over and over, read 5 Dumb Mistakes Nearly Every Investor Makes.
The bottom line
I was a stockbroker during the 1987 crash, and I’ve been investing through every scare since. Every one of them felt like the end of the world at the time. None of them were.
That doesn’t mean this one turns around next week. It could get worse before it gets better.
But here’s what 45 years have taught me: The market rewards patience and punishes panic. So I’m keeping my stocks, lowering my expectations and sleeping fine tonight — because none of the money I’ll need soon is riding on what Wall Street does tomorrow.
Make sure you can say the same.
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