The stock market just stumbled, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all down Friday morning following Israel’s attack on Iran.
You might be feeling a knot in your stomach as you watch your portfolio value shrink. Whether it’s the first or fifteenth time you’ve seen markets drop simultaneously, it never feels good.
But here’s the perspective seasoned investors maintain: Whether it’s caused by geopolitical tension or economic strain, market volatility isn’t just normal — it’s inevitable. While cable news channels might be in full panic mode right now, history suggests this is just another chapter in the long story of markets that trend upward over time, albeit unevenly.
Here are some tips to help you survive the dip.
1. Don’t make emotional decisions
The worst thing you can do right now is panic-sell. Studies consistently show that investors who try to time the market by jumping in and out typically under-perform those who stay the course.
Take a deep breath. Log out of your brokerage account if checking it is causing anxiety. The market may continue dropping, or it may bounce back. Neither outcome should dictate your long-term strategy.
2. Use this opportunity to reassess your risk tolerance
If today’s drop has you seriously concerned about your financial future, that might be a sign your portfolio is taking more risk than you’re comfortable with. When markets are rising, we tend to overestimate our appetite for volatility. Downturns provide clarity about our true risk tolerance.
Ask yourself: “If the market fell 15% from here, would I still be able to sleep at night?” If the answer is no, you might need to reconsider your asset allocation once markets stabilize — not in the midst of high volatility. You might have too much money in stocks in light of your difficulty stomaching stock market drops.
3. Consider buying the dip (strategically)
Warren Buffett famously advised to be fearful when others are greedy, and greedy when others are fearful. Market drops often represent buying opportunities for long-term investors.
Those quality stocks or funds you’ve had on your watchlist? They’re now on sale.
This doesn’t mean emptying your savings account to go all-in today. Nobody can perfectly time market bottoms. Consider putting some money to work now and reserving some for further potential declines.
4. Revisit your financial plan
Market volatility is a good catalyst to review whether your overall financial strategy still makes sense. Are you still on track for retirement? Is your emergency fund adequate? Have your financial goals changed?
The market has always recovered. The question is whether your financial plan is resilient enough to weather these inevitable storms.
5. Remember what really matters
When markets drop sharply, it’s easy to get caught up in the day-to-day movements. But for most of us, what happens on any single trading day—even a dramatic one—has very little impact on whether we’ll achieve our long-term financial goals.
What matters far more is saving consistently, keeping investment costs low, maintaining appropriate diversification, and sticking with your plan through market cycles. Taking the long view might be hard today, but it’s exactly what successful investors do.
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