Tue Apr 08 2025, by Tyler Gardner

5 Key Principles to Remember When the Stock Market is Crashing

Here are the only five things you will ever need to remember for when the stock market is crashing and everyone around you is losing their minds. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to guide you through turbulent times.

1. You Haven't Lost Any Money

First, remember that you have not lost any money. Your assets may be worth less today than they were yesterday, but that doesn't mean you've realized a loss until you sell.

2. Assets on Sale

If you liked those assets yesterday, congratulations! They’re on sale today. This is an opportunity to buy more of what you believe in at a lower price.

3. Understand Your Risk Tolerance

If you sold your assets yesterday, also congratulations! You just learned all you will ever need to know about your actual risk tolerance level. Use this knowledge to invest more appropriately for the rest of your life.

4. Avoid Focusing on Daily Performance

Focusing on any one day's performance is the single biggest mistake you can make as a rookie investor when it comes to building long-term wealth. The market has not crashed. As of August 6th, 2024, the market is up 10% year-to-date, and the S&P 500 has notched over 30 all-time highs so far in 2024. So when in doubt, zoom out.

5. The Market vs. the Economy

Lastly, understand that the stock market is not the economy. It’s nothing more than our collective consumer sentiment about the economy. It is a fickle thing, just like each one of us, reflecting our own greed and fear.

If any of this information is helpful, please like and follow, and I'll keep trying to get you one step closer to where you need to be.

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