15 Ways to Ease Anxiety About a Stock Market Crash

In a period when many stocks are historically expensive and investors are looking toward the strong possibility of another market crash, the importance of wise investment choices is as apparent as ever.

If you find yourself worried about the next market crash and what it could mean for your portfolio, here are 15 easy ways to calm those fears and keep your focus on your broader long-term investing goals.

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While the market may be signaling that another crash is nearing, it’s just as possible that the next downturn may not happen for some time. Although market crashes are a normal and fairly common event, no one can predict for sure when the next one will happen.

Rather than fearing the next crash, consider using this current period in the market to continue investing in stocks that can supercharge your portfolio for the next downturn. And remember, market crashes are full of compelling investing moments, as many premium stocks see temporary price downswings that give investors the chance to buy in at a serious bargain.

ALSO READ: 3 Reasons Not to Worry About a Stock Market Crash

While a handful of crashes have gone on for years, the vast majority resolve in a matter of months. The bear market that began in March 2020 was one of the shortest on record and was followed by an equally historic rebound in the summer that followed.

Although past market crashes don’t forecast the events of future ones, they can provide investors a point of reference with which to view the potential ramifications of a downturn and how to best approach these periods in the market.

Investors can rest confident in the fact that whether a market crash lasts for weeks, months, or even longer, it will inevitably end. There’s no escaping the reality that a market crash can be tough on investors’ portfolios, but there are also certain sectors that tend to perform better during periods of downturn than others.

For example, following the crash of 2020, stocks in more defensive-leaning sectors like healthcare, consumer staples, and tech not only fared well from a business perspective but also marked strong share price spikes in the period of the market’s rebound.

While your portfolio might suffer short-term losses in a crash, consistently putting your money toward high-quality investments (i.e., growth stocks, value stocks, and dividend stocks) can help you to minimize these negative effects and prime your holdings for a stronger recovery when the downturn ends.

There are a variety of ways in which the stock market can recover in the aftermath of a crash. The robust stock market rebound that occurred after the coronavirus crash of 2020 was record-breaking, and the recovery that follows the next downturn may or may not look anything like this.

However, a rally often follows a crash, which can result in lofty portfolio gains for investors who stayed the course and refused to panic sell their holdings.

ALSO READ: Anxious About a Market Crash? Start Doing These 3 Things Right Now

If you’re feeling particularly anxious at the prospect of another market downturn, now’s a great time to evaluate your savings and liquidity. It’s important to make sure you have a nice nest egg set aside should you need to tap into your cash reserves to cover expenses during a potentially tough economic period.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Blue chip stocks are the household name brands that sell products people use every day. This makes blue chip stocks ideal investments to anchor your portfolio and continue generating returns during both bumpy and booming market periods.

Diversification is a crucial part of building a market-beating portfolio. If you find yourself worried about how your portfolio will fare during the next market crash, it may be wise to assess your current strategy of diversification when you invest.

For instance, is your portfolio composed of just a handful of companies from the same sector, or is your money spread across multiple sectors and types of stocks? The problem with underdiversifying your holdings to a single stock or sector is that your portfolio could be in for a particularly rough time should that company or segment of the economy falter, whether due to a downturn or other outside factors.

On the flip side, if you distribute your money across a variety of investments, investment classes, and industries, you can achieve a more balanced portfolio able to withstand a variety of market changes and headwinds.

ALSO READ: If You Invested $10,000 Just Before the Last 3 Market Crashes, Here's How Much You'd Have Today

One of the most common reasons investors fear market crashes is because they fear losing money. When stock prices plummet in the aftermath of a crash, many rush to sell stocks that are taking the heat.

Of course, this often accomplishes the exact reverse of what these investors intended, which was to minimize their losses. The problem with panic selling your stocks in a market crash is that it’s incredibly likely you’ll sell at a loss.

What if you wait out the storm and resist the urge to panic sell struggling stocks when the next market crash occurs? Well, you could very well see the share prices of those companies go back up during the market’s recovery and even regain or eclipse their prices prior to the crash, effectively wiping out any provisional losses your portfolio may have suffered.

Stock market crashes aren’t fun, but that doesn’t mean you can’t seize upon the unique buying opportunities they afford. Investors love a good bargain, and there’s often no shortage of premium stocks trading at super-low prices when the market is down.

While even the most established of companies may see share price declines during a market crash, the near-term rise and fall of a stock’s share price is never an indicator of its quality as an investment.

And when you only buy stocks that have excellent underlying businesses and that you plan to hold for many years before selling, you’re less likely to experience sustained losses because of a temporary crash and your portfolio could also realize the upside potential of the market’s eventual recovery.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

A market crash needn’t derail your overall long-term financial goals or stop you from investing in more top stocks. Assuming you have your savings situation squared away and cash to spare, you should continue to focus your investing efforts on companies with resilient businesses primed for long-term growth. And with stocks tending to trade at bargain prices in a downturn, your cash will go much further.

ALSO READ: Stock Market Crashes Are Common: 3 Stocks to Buy if One Happens

It’s important to note that looking back over the broader history of the stock market, stocks tend to grow more than they decline. This is one of many reasons why a long-term investing strategy is so effective to wealth building through the stock market. Instead of trying to time the market, long-term investors focus on great companies that can deliver sustainable returns over the years.

Even the most rock-solid stocks with strong noncyclical demand for their products or services could still note a steep price drop amid a market crash. It’s wise to ensure you have some cash ready to invest so you can pounce on the abundance of stock bargains that will almost certainly occur when the next correction or crash happens.

A stock’s price alone doesn’t make it a great buy or a bad one. Fantastic companies can trade at low valuations, and underwhelming companies can be surprisingly expensive.

And when the market crashes, it’s anyone’s guess as to how stocks will react. If you only buy quality stocks that you’re confident holding for years, several months of murky market movements shouldn’t cause you to change course.

ALSO READ: 5 Stocks I Own That I Want to Add to When the Stock Market Crashes

This is an important point to bear in mind. While you shouldn’t panic sell during a downturn and you should consider investing in more great stocks at bargain prices, there’s no reason you have to press the buy button just because other long-term investors are.

If your cash situation isn’t shored up or you just don’t feel super comfortable buying stocks in the next crash, there’s nothing wrong with waiting to invest again until the decline slows and recovery starts.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

As Warren Buffett has said, “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.” This quote is relevant during any time in the market, and it rings especially true right now.

For those who stick to the main tenets of long-term investing -- investing in high-quality companies only and holding onto those investments for years at a time -- the prospect of another market crash needn’t fill you with fear and trepidation.

In fact, as a long-term investor, try to instead consider the prospect of another market crash for what it is -- an occasional market event that historically happens every few years, typically lasts several months at most, and is often followed by a robust rebound.

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