3 Essential Moves to Make During a Stock Market Correction

Any time the stock market takes a dip, it can make for a nerve-wracking situation. And that’s the position many investors are in right now.

Whether you’re a seasoned investor or are new to buying stocks, stock market corrections like the one we’re seemingly in the midst of can be extremely stressful. And while they may not be as panic-inducing as a full-blown market crash, it’s important to know how to navigate them. Here are a few tips for getting through this current period of volatility.

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1. Stick to your buy and hold strategy

As a general rule, it’s a better bet to load up on quality stocks and hold them for decades than to buy stocks on a short-term basis with the hopes of selling them quickly at a profit. If you’re in the “buy and hold” camp, then it’s important to stick to that plan as the stock market falls into correction territory.

Tempting as it may be to unload stocks when their value starts plummeting, the one thing you must remind yourself is that you don’t lose money during a stock market correction (or a full-blown crash, for that matter) until you actually sell off assets at a lower price than what you acquired them for. If you stick to your plan to hold your stocks for many years, then you may not lose so much as a dime as the current situation plays out.

In fact, if you’re in your 30s or 40s and are investing for retirement, chances are, the stock market correction we’re grappling with now is an event you won’t even come close to remembering by the time you’re ready to tap your portfolio. It’s important to keep that in mind at a time when the bulk of the stock market news you’re reading is negative in nature.

2. Look for discounts — but do so carefully

It’s easy to think of a stock market correction as a bad thing. But actually, during a correction, you have a prime opportunity to scoop up quality stocks on the relative cheap.

That said, don’t just go on a buying spree because stock values are down. Instead, do your research.

If there’s a company you think has solid potential whose value is now down as part of a broad market downturn, then it’s probably a buy. But if there’s a stock whose value was already sinking before the events of the past week, then it’s a company you may want to be more careful with.

3. Don’t check your portfolio balance every day

We’re definitely in the midst of a rough patch as far as the stock market is concerned. And so now’s really not the time to check your portfolio daily. Doing so might mess with your mental health and drive you to make rash decisions that result in losses.

If you absolutely must check your portfolio balance, do so once a week. And also, promise yourself that you’re not going to let the number you see inform your actions.

Keep your cool

It’s natural to be nervous when stock values fall quickly. But do try to remember that stock market corrections are actually pretty common. In fact, they’ve happened about once every 19 months, on average, dating back to 1928. And while you may not be thrilled with the state of your portfolio right now, just remember that the stock market has a strong history of bouncing back from corrections. If you stay calm and keep your cool, you’ll make this current bout of volatility much easier to get through.

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