Many investors expect instant gains after buying stocks during a downturn, but the reality is often the opposite. Prices may continue to drop and remain low for a while, leading to frustration and regret. Let’s dive into how you can shift your mindset, develop a strong game plan, and make the most of the next market crash.

Why Most Investors Struggle During Market Crashes

The biggest mistake investors make during crashes is obsessing over share prices instead of focusing on the underlying business. Here’s why this mindset leads to failure:

• Short-Term Thinking: Many investors buy during dips expecting an immediate rebound. When prices continue to drop, they panic and sell at a loss.

• Emotional Reactions: Watching a portfolio go deep into the red can be disheartening, causing impulsive decisions.

• Lack of Business Focus: Instead of evaluating the company’s performance, investors fixate on stock tickers and short-term price movements.

The key is to think like a business owner rather than a speculator. Successful investors focus on accumulating high-quality assets—companies with strong fundamentals—at discounted prices.

Lessons from Past Market Crashes

Market crashes like those in 2000, 2008, 2018, and 2020 presented incredible investment opportunities. In hindsight, investors wish they had poured money into the market during those downturns, as stock prices eventually recovered and reached new highs.

If you’re facing a market crash today, this is your chance to act. The current market conditions mirror those of past crashes. The difference is that now you don’t know how long the downturn will last or how low prices will go. That’s why having a clear game plan is crucial.

How to Overcome Market Crashes

Selecting companies that can perform well in any market condition is the key to surviving and thriving during a crash. Here’s what to look for in a resilient business:

1. Mission-Critical Products/Services: Companies whose offerings are essential to their customers.

2. Pricing Power: Businesses that can raise prices without losing customers.

3. Customer Retention: Companies with loyal customers and low churn rates.

4. Strong Financial Metrics: firms with improving revenue, profit margins, and cash flow.

If you own such companies, you can stay confident even when their stock prices decline. The market will eventually recognise their intrinsic value, and prices will rebound.

My Game Plan for the Market Crash

Here’s the strategy I follow to navigate market crashes and come out ahead:

1. Focus on Active Income: Strengthen your cash flow to ensure you can save and invest consistently.

2. Save Money for Investing: Build a cash reserve to take advantage of opportunities during downturns.

3. DCA (Dollar-Cost Averaging): Gradually invest over time instead of trying to time the market.

4. Build Conviction: Research your companies thoroughly and trust in their long-term potential.

5. Find a Hobby: Keep yourself distracted from daily price movements to avoid emotional decisions.

6. Delete broking apps: Avoid obsessing over your portfolio by reducing unnecessary monitoring.

7. Learn and Improve: Use the downtime to deepen your investing knowledge and refine your strategy.

8. Stay Committed: Keep investing for the long term, no matter how challenging the market becomes.

Key Takeaway: Think Long-Term

The stock market rewards those who think long-term and remain patient during downturns. If your company is performing better year over year, stay invested. As Benjamin Graham said, “In the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.”

Final Thoughts: Stay Strong and Invest Smarter

A market crash can be intimidating, but it’s also an opportunity to build wealth. Stick to companies with strong fundamentals, focus on the long term, and follow a disciplined strategy.

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We’re all in this investing journey together—stay strong and keep growing!