💡How I’m Preparing for a Stock Market Crash💡
I've been hearing news headlines about a possible market correction or market crash 📉 for a while now, and I'm not gonna lie, I'm a little scared 😨. I know the right thing to do is not worry, the market always recovers, and long-term everything will be fine.
But, I had a hard time sitting on my hands doing nothing. So, this is what I came up with. This is not financial advice. These are just strategies ♟️ I've been using to help me feel more equipped for a dip, and to help me sleep 😴 better at night.
💪 1. Reassess all the holdings in my portfolio. Keep quality. Ditch/reduce the rest.
I asked myself: Do I still feel confident about this asset long-term? If I'm paying a higher expense ratio, has it been performing well enough to merit the fees? If the asset has decreased in value, how long will it take to come back? If the answers to any of these questions weren't very promising, I either decreased my position or sold off completely.
Several months ago I decreased the cryptocurrency in my portfolio from 7% down to 2%. I still believe in crypto long-term, but I don't know which coins are going to survive, and I don't know how long it will truly take for the world to fully adopt this technology. I sold BTC for a profit, and ETH for a loss. I'm still holding both, just a lot less.
I sold about 80% of my $ARKK at the beginning of last week, while I was still up 10%. This ETF killed it last year, but hasn't performed well this year, and has an expense ratio of 0.75%. I already own several of the individual holdings within this ETF. So it didn't seem necessary to double ✌️ dip that much.
I sold all of my $LMND and $COUP today, for 10-30% losses. I wasn't holding much $LMND or $COUP , so it wasn't too terribly painful, but it's always hard seeing a permanent red mark in my portfolio. I was on the fence about these for a while, and figured it was best to cut my losses and move on.
🙅♀️ 2. Avoid any new, higher-risk purchases
I broke this rule last week and picked up a small amount of $DNA because I think they're doing some really interesting things. BUT for the most part I've been trying to avoid any other higher-risk purchases at this time (ex: IPOs, individual small caps, and things I don't really understand). FYI it's generally a good rule of thumb not to invest in things you don't understand. I've also made that mistake. Live and learn.
✅ 3. Continue making automatic investments in my retirement account
The market may correct/crash, but I don't know when. I didn't want to miss the potential gains if the market just keeps going up.
💰 4. Build up my "dry powder"
"Dry powder" is a term used to describe unspent cash that is waiting to be invested. I usually invest all the extra money I have, but for the past few months I've been stockpiling my extra cash. This way I'll be ready to "buy the dip" if there is a large correction.
🔄 5. Implement sector rotation with a small portion of my portfolio
I've slightly increased the allocation of my portfolio in sectors that tend to fare better during economic slowdowns. Specifically, I added a little bit of the following sectors: consumer staples, utilities, and healthcare. These areas may still drop with the total stock market, but I'm hoping that they won't drop quite as much.
Here's the previous post I wrote describing sector rotation: https://public.com/posts/3sUvPnZ6LpRSQFkcmJ5wPaqg4m3eEddg
Have you been doing anything special to prepare? Let me know your ideas. And if you haven't done anything at all, that's probably fine too. Sometimes the best thing to do is nothing.
#stockmarketeducation #feedmybrain #sectorrotation #playingdefense #stockmarketnews #stockmarketmoves
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Number 4 is huge. Always have cash on hand to buy the huge dips/crash. New investors need to realize, stonks don’t always go up lol. There’s gonna be weeks, months, sometimes years of pain when the bear takes over but if you’re wise and invest over time, you will come out on top. There’s also a reason why dividend investors are calm and collected during storms, cause they’re still collecting money…See more
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Victor@victor
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@jkim229 yeah dividend investors are probably chuckling at us growth investors right about now 😭
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Robert Steptoe@robertthe1
Love the post. Makes me feel better about my portfolio make up. I think that tech is going to blow up so I've been moving some money around. And putting it tech stocks. Little by little. But not enough to brake me if it don't turn out good.😎👍❤️
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@Freshmoney2021 yeah there's A LOT of red in the market today. I'd be freaking out as a new investor right now.
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@AxA lol we each have different ways of coping
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@Kelly62u it's happening today.
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]] 7th🎢ug7g777g7g7h
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The market always goes down in October and the end of September this has happened year over year corporations dip into stocks as money becomes harder to get over the holidays that's why they keep a certain amount in cash even banks do this when a had storm will come in they will keep 1 million 500k cash in hand in case of a bad storm so probably best time to rob a bank if u want I guess lol a frie…See more
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Good post 👏
1: (did this this morning) Reassessed my portfolio. In my personal opinion most of the stocks in my portfolio are heavily discounted if we talking 2030
2: not adding any new investments / buying more shares until market cools down. Maybe for a couple of months
3: will start adding to retirements & 401k
4: hold money in case of a huge dip
😇
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Chris L Tran@shibonecent
Sometimes I need the Mariana Trench to get my other stocks rise up.
Today was a great day for dca
Cheers up MN…. ! Don’t let downed market worries u…..🤪
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@ToTheeMoon selling losses is sometimes a necessity to preserve the rest of your portfolio. There’s something called the “breakeven fallacy”, where you think if you just hold long enough, the stock will recover enough for you to breakeven. However, some stocks take several years to recover, and some never recover at all. Also, a stock that drops 50% requires a 100% increase just to breakeven. Plus…See more
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Kathleen Alan@Alankj1
Last time the market took a serious correction and everyone was crying about their 401k’s; I increased my contributions. For anyone less than 40 yrs old and in good health, I’d agree we’re nearing what some may call a “crash;” but you should look at as a shopping spree! We’re in this for the long haul! Don’t fall prey to economic fear (based on your age and risk tolerance). This season will offer…See more
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@financepillowtalk I am not selling any of my current investments in any of my accounts. The only thing I'm doing is reducing how much I automatically invest by 50% for the exact reason you stated with your fourth reason (Dry Powder).
It's interesting to see so many people selling with short term gains as the primary concern
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Dallas@junglemarine
Precious metals are very low right now. I've been silver stacking like crazy. It seems to me when stocks fall hard is when silver and gold rise. Any ideas there ?
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Jonathan Tidwell@Tidwell85
I invest in the s&p 500 stocks. Let them break it over the best stocks and make my money for me. Sometimes good sometimes not so good. I’ve made decent in the shorts