Is it time to panic sell?!
Handling investing in volatile times
Introduction
Tariffs, inflation, and recession, oh my! It’s been a wild last couple of months for the markets. We've all seen it: the crimson tide washing over our portfolios, the news anchors looking like they just witnessed a ghost, and that nagging feeling that you should have just invested in canned goods and a bunker. Despite the S&P 500 and Nasdaq Composite posting some gains earlier last week, the S&P 500 ended up negative for the fifth time in the last six weeks, while the Nasdaq is looking like it might end March with its worst monthly decline since December of 2022.
With tariffs set to roll out on Wednesday, this week could be even more chaotic.
I’ve covered this topic before, but in this newsletter I’ll discuss how I’m handling investing during volatile times like this, as well as re-introduce my “7000 strategy”.
Disclaimer: This is NOT financial advice. I am just sharing my strategies, investments, stocks, and index fund strategies, what I'm buying, and where I plan to take those investments. Everyone’s financial goals are different. No financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not intended to be a substitute for advice from a professional financial advisor or qualified expert.
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Handling Market Declines
It’s natural to feel uneasy when you see red across your portfolio. But before you start Googling “how to live off the grid,” remember this: market downturns are a normal part of investing.
There are a lot of unknowns with today’s economic climate, including tariffs, inflation fears, and the possibility of a recession. I won’t pretend to know if the current downturn will last another week, month, or year. However, historically, markets have always rebounded from downturns, rewarding patient investors who stay the course. Selling in a panic often locks in losses, while disciplined investors use downturns as opportunities to buy quality stocks at a discount—because who doesn’t love a good sale?
Instead of reacting emotionally, take a deep breath. Review your financial goals, assess your portfolio’s diversification, and maybe resist the urge to refresh your brokerage app every five minutes. Short-term volatility is the price we pay for long-term gains—kind of like eating your vegetables before dessert.
The Right Mindset During Market Declines
Stay Rational: Yes, your portfolio looks rough. No, that doesn’t mean selling everything and investing in canned goods.
Evaluate Opportunities: Down markets = discounted stocks. It’s like Black Friday but for your financial future.
Stick to Your Plan: Panic-selling never made anyone rich—except maybe the guy buying your shares at a discount.
An Example: How I’m handling my Nvidia stock
Nvidia is my largest individual stock holding, comprising about 30% of my stock account. Just two months ago, on January 6, 2025, the stock hit an all-time high closing price of almost $150 ($149.43 to be exact). At the time of this writing, it is trading at about $105, about a 30% drop.
I believe in the stock and don’t think it has peaked. If I do think it will hit $150 again, do I sell today at about $105, try to time the market and buy back in when it’s back on the rise, and risk losing gains along the way? Or do I buy more shares today, and have those shares grow 43% (while the drop from $150 to $105 is 30%, the stock needs to increase 43% to get back to $150) by the time the stock is back at $150?.
It’s a personal decision, but I’m buying. I’ve noted before that I auto-invest into a dozen ETFs each week. In addition to that, each week this month, I added more to all of my positions except for Tesla, with my latest buying spree being this past Friday. And I will continue to do so.
It can be scary continuing to put money into the market and see the arrows point downwards. But for me, it has always paid off over time. Here are some strategies I use to weather the storm:
Diversification is Key – Don’t put all your eggs in one basket (unless it’s a very, very diversified basket).
Revisit Your Risk Tolerance – If you’re losing sleep over your portfolio, it might be time to adjust your strategy (or at least stop checking it at 2 AM).
Think Long-Term – The most successful investors aren’t the ones who react to every dip; they’re the ones who zoom out and see the bigger picture.
Consider Dollar-Cost Averaging – Invest steadily over time and ride the waves instead of getting seasick.
Turn Off the Noise: Seriously, mute the financial news. Your mental health will thank you. Replace it with cat videos or cooking shows.
Re-visiting my “7000 Strategy”
I explained my benchmark strategy when I first started this newsletter, which is essentially setting a fluid S&P 500 benchmark that I believe is achievable within the next couple of years. It’s something I found useful in the past when the market would be dropping. When I started this newsletter, the benchmark was 4800, so if the S&P 500 dropped to 4000, that would mean I’m buying at a 17% discount, so any dollar I put in that day will be up 17% when the S&P 500 eventually hit 4800.
Since then, the market continued to rise. The benchmark moved to 5000, 6000, and then 7000 last November.
The S&P closed at 5580 on Friday, about 9% off its peak. For every share of an S&P 500 index fund I buy now, it will be up around 25% by the time the index hits 7000. How long until we get to 7000? With a new administration and market unknowns, anything’s possible. It could be next year, or it could take years. Either way, if it never happens, we’ll have more significant issues than missing my 7000 goal.
Conclusion
Market volatility is like a bad roommate: loud, unpredictable, and occasionally makes you want to move out. But remember, time and time again, the stock market has faced downturns, but history shows us that markets tend to recover. From the Great Depression to the 2008 financial crisis, those who stayed invested ultimately saw growth in their portfolios. In other words, the world didn’t end, and your investments won’t either.
Panicking leads to poor financial decisions. Instead, see downturns as opportunities and trust your long-term plan. And if you’re really feeling stressed, maybe take a walk, drink some tea, and try organizing your sock drawer. It's equally productive and less financially damaging.
That's it for this week! As always, no financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not intended to be a substitute for advice from a professional financial advisor or qualified expert. If you haven’t already, please subscribe to this newsletter below and never miss an update: