How To Mentally Survive a Stock Crash

I’ve written a few articles on investing in stocks. Also, I’ve written about my investment strategy. Today, I want to look at how you can survive the mental troubles when your investments crash.

Stock Market Crashes

When you invest in stocks, you become co-owner of the companies you bought shares in.

That sounds great, in theory, and usually it is. When the company makes profit, you get to share in that profit.

The more profit is expected in the future, the more your shares will be worth.

However, as an owner, the opposite is also true. When the company becomes less valuable, because of chaos in the world, or otherwise, you lose value in your investment.

Every trading day, the value of your stocks fluctuates. When prices suddenly drop by large amounts, we call that a crash.

After corona

After the corona crisis hit, stocks plummeted. This was to be expected. With a shutdown of most of the world economy there’s a lot of uncertainty in the market.

This uncertainty means that investors want out of stocks and into safer assets, such as cash. This drove prices down.

For buy-and-hold investors, such as myself, it doesn’t make sense to get out of stocks. The problem is when to get back in.

My favourite index fund ETF, VWRL, had a low of 58 euros. Even at that price, people were saying this wasn’t the bottom. Today, the fund trades at 76 euros. These people missed a lot of upwards potential. That’s why I don’t sell, instead I just stay invested and keep buying.

Investing is a Mind Game

I have been investing for quite a while now. Not for decades, but long enough to know that the market goes up and down.

My cryptocurrency portfolio has seen extreme ups and downs. I’ve experienced the 2018 crash that was way worse than what we’ve seen in stocks recently.

I guess that trained my resistance to sell.

But still, even with the rationale that selling is not smart, and the experience of market drops in crypto, this was a wild ride.

I lost about 12k in value, top to bottom, in my stock investments. Currently, I made back about 7k thanks to the move upwards and some buys I did during the crash.

How do you deal with this volatility, and seeing your money go down the drain every day? Honestly, I don’t know.

My secret is I simply don’t care. Lost 2,000 euros in a day? Good. I don’t care. The reason is I don’t need this money now. I don’t even need it next year, or in ten years from now. This is money that’s earmarked to be invested for decades to come.

The market will probably correct upwards. It always has. And it turned out it corrected after the 2020 crash as well.

If you can’t simply not care, then I have two things for you to do.

The first is to delete your brokerage app from your phone and to stop reading the news. If you can’t handle being confronted with bad news, then simply stop consuming bad news.

My DEGIRO app was red every single day. That’s not cool. That’s nerve wrecking. But if you can’t deal with it you simply shouldn’t. It’s that easy. Just don’t sell. Please.

The second is to watch this video. Do it. You will feel better.

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4 thoughts on “How To Mentally Survive a Stock Crash”

  1. Joe O'Connor

    Thanks FireTheBoss!!

    greetings from you operate a Basic or Custody account?

    1. I personally opened a basic account. But you should make the decision yourself. For me the added costs of a dividend fee were not worth the custody account but your needs might differ!
      Thanks for stopping by!

  2. Just as JL Collins (the guy from the video) says: this crash is no different than all crashes that have already happened. And we have seen a crazy bullmarket for 10 years. So this is actually healthy!

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