The Market Is Down—Now What? Smart Moves to Consider
The one market tip you need is... downturns are normal.
Market downturns are inevitable, but they aren’t a reason to panic. Historically, declines are a natural part of investing and often present opportunities for those who stay disciplined. Here’s why downturns happen, how they fit into long-term market cycles, and how you can position yourself to benefit.
How Common Are Market Downturns?
Historically, on average, the market goes down 1 out of 4 years, 5 out of 12 months, and every other day.
The S&P 500 has historically dropped 10% or more nearly every year.
A 20%+ decline (bear market) happens about once every 5-6 years.
Despite this, the market has always recovered over time, with long-term returns averaging around 8-10% annually.
Why Market Declines Happen
Markets don’t move in a straight line. Short-term drops are often triggered by:
Interest rate changes
Economic slowdowns or recessions
Inflation concerns
Geopolitical events
Earnings disappointments
But in the long run, markets tend to rise because businesses grow, economies expand, and innovation continues.
How to Take Advantage of a Market Drop
Instead of fearing downturns, use them as an opportunity:
1.Keep Investing (Or Invest More)
If you’re contributing to a 401(k) or brokerage account, keep going. Dollar Cost Averaging is a great tool.
Buying during a downturn means getting stocks “on sale.” Who does love a good sale?
Consider increasing contributions if you have extra cash.
2. Rebalance Your Portfolio
If stocks have fallen while bonds or cash have held up, rebalancing can position you for the eventual recovery.
Look at tax-loss harvesting to offset future gains.
3. Stick to Your Plan
Reacting emotionally leads to selling low and missing the recovery.
Timing the market rarely works—the best days often follow the worst days.
Instead, focus on long-term goals, not short-term noise.
4. Look for Bargains
High-quality stocks often get oversold in downturns.
If you have a watchlist, downturns can be a good time to buy.
Dividend stocks and defensive sectors (healthcare, utilities, consumer staples) can help stabilize portfolios.
Final Thought
Market downturns aren’t a sign to exit—they’re an opportunity to build wealth. Those who stay invested, rebalance, and buy strategically tend to come out ahead. The key is patience, discipline, and a focus on the long term.
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About the author: Finn Price, CPFA, CEPA, is a business owner and wealth manager at Railroad Investment Group. He helps successful entrepreneurs & individuals with concentrated stock positions in their 30s, 40s and 50s build, organize, protect and transfer their wealth.
Note: this article is general guidance and education, not advice. Consult your money person or your attorney for financial, tax, and legal advice specific to your situation.
Securities and advisory services offered through LPL Financial, a registered investment Advisor, Member FINRA/SIPC.
