5 top tips for surviving a stock market crash

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Fear of another stock market crash dominated the headlines last week. We really can’t predict if or when one might happen. But we can plan to survive one and even benefit from it.

So I searched for expert tips on how to deal with a stock market crash. And I want to share a few with you, along with my own thoughts.

Avoid panic selling

I would say panic selling is probably one of the worst things we can do. And I’m far from alone. Investment experts on the internet are saying exactly the same thing.

However, it can be easier said than done. Just look at what has happened in the Covid pandemic. Stocks plummeted much harder than necessary due to panic selling.

But panic selling can yield some great bargains for the cool-headed investor. And that brings me to the next tip.

Buy more shares

Finding ways to survive a stock market crash prompts many recommendations to buy more stocks.

Billionaire Warren Buffett once said, “About every ten years, dark clouds will fill the economic skies and it will briefly rain gold“. As he put it, these are times when you have to rush outside with washtubs. And fill them with cheap stocks.

reduce risk

But what if you don’t like risk? Everyone has to work out their own risk tolerance. So there’s no point in just asking people to go out and buy.

Riskier growth stocks can fall sharply during a market downturn. As a result, risk-averse investors could experience some heart-pounding moments.

To reduce that fear, we can stick to safe, mature companies in key markets. For example, skipping technology stocks and investing in companies that make or sell food can help minimize sleepless nights.


I see pundits stressing the need for diversification. And that’s a tip I wholeheartedly agree with. If there is a crash this year, it will likely be triggered by financial problems.

Inflation remains stubbornly high and interest rates are also high. So bank stocks have fallen faster than most. So it might not be a good idea to have too much investment in the financial sector.

To reduce risk, I invest in a variety of stocks spread across different sectors. In fact, I always own a few mutual funds that offer diversification into a single stock.

change nothing

I’ll finish with a tip of my own. See, I think long-term investors should be doing all of these things anyway.

Why would we ever panic sell, whatever the reason? And why shouldn’t we always try to buy as many stocks as possible?

Keep risk in our comfort zone and diversify to weather sector crises? Well, I do that all the time too. I think everyone should.

What’s next?

There are many tips for overcoming a stock market crisis. And remember what followed every stock market crash in history? That’s right, another bull run.

The 5 Top Tips for Surviving a Stock Market Crash post first appeared on The Motley Fool UK.

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The views expressed in this article are those of the author and therefore may differ from the official recommendations we make on our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a variety of insights makes us better investors.

Motley Fool Germany 2023

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