How I Face Fear When the Market Crashes

When the panic comes out of nowhere

I hear the market is crashing. I open my phone and see that the money in my account has suddenly shrunk again.

My head buzzes. My first instinct is to find out what happened. But when I open the news and social media, the screen is full of bad news, and the more I read, the more uneasy I feel.

Sell, and I'm afraid of selling at the bottom. Don't sell, and I'm afraid it falls further tomorrow. Both choices feel like mistakes, so I keep checking the price, keep searching for explanations, and still can't make a decision.

Over the past ten years I've been through moments like this more than once. I'd like to believe many people struggle with the same thing.

And it isn't only the drops that unsettle me.

When a stock I hold keeps going up, I worry it will suddenly fall — fear of heights.
When a stock I didn't buy keeps going up, I worry I'm missing out — FOMO.

It seems that whichever way prices move, there is always something to feel anxious about.

Yet the one thing investing punishes most is making decisions while emotions are running high. In those moments the brain is easily hijacked by its emotional side, and the decisions that come out are usually impulsive.

The fix: name exactly what you are afraid of

Sometimes what torments me most is not even knowing what I'm afraid of. Like a vague shadow in a dim room — because you can't see it clearly, it scares you more.

At that point, forcing yourself not to be afraid doesn't work. What you can do is try to name the fear precisely.

Fear isn't always bad. Sometimes it's a messenger, telling you about the problem you actually need to face.

So I start by paying attention to my body and noticing where it feels worst. Usually I notice discomfort in my chest and my head. I put my attention there and feel its intensity and rhythm.

I stay with it for a while, see what events and thoughts come up, and then try to make them specific: what exactly am I worried will happen?

For example:

Afraid of losing money it took a long time to save.
Afraid the money won't be there when I need it.
Afraid my judgment was wrong and I keep refusing to admit it.
Afraid everyone else saw the danger long ago and I'm the only one still in the dark.

Behind each of these worries may be something I genuinely care about. Once I see them clearly, the panic doesn't necessarily go away, but it eases.

Like suddenly switching on the light in a dim room — everything becomes clearer.

Check the problem behind the worry

Once the fear has a name, I ask the next question: what problem does this worry point to? What can I check, and what can I do?

If I am worried that further declines will affect my life, I check my cash plans first. Do I need this money soon? If I could not get it out for a while, would that disrupt my plans?

If I don't need the money soon but this decline is still hard to bear, I need to rethink my position size. Even if I've already trimmed, I may have overestimated how much I can stomach in a crash. Still, I figure out why it hurts first, and only then decide whether to adjust.

If I am worried that I got it wrong, I go back and check my original reasons for buying.

Is the business I liked back then still the same today?
Have new facts emerged that contradict my original view?
Did I mistake overly optimistic expectations for things that had already happened?

The check doesn't stop at the company itself. If I suspect external conditions such as interest rates or liquidity have undermined my original view, I need to dig further: what exactly changed, how does it affect what I hold, and has it reached the point where I should adjust?

At this point I may find a real problem: my position is bigger than I can tolerate, money I need soon is tied up in the market, or my reason for buying no longer holds. These need to be dealt with seriously, not brushed aside with the excuse that "it's just market sentiment."

Or I may find, after checking, that nothing new is strong enough to change my decision for now. Then I write down what still needs watching, and check again when new information shows up.

For me, taking action is a very good way to deal with anxiety: researching, double-checking my judgment, rearranging my cash — and also confirming that the checks are done, and putting the phone down for a while.

Emotional aftershocks: stop ruminating

Thinking it through and finishing every step doesn't mean I immediately feel at ease. As long as the situation hasn't changed, fear and anxiety may still sweep back in, even after a decision has been made.

When I catch myself chewing on the same question and scrolling the same news, I ask myself: is there a new fact? If there is, I check again. If I'm just running the same worry one more time, I remind myself that I've already checked, and there's no need to ruminate.

Then I bring my attention back to what is in front of me and gradually return to normal work and life.

Those are the steps I take when panic hits.

It sounds simple; only when you actually do it do you find out how hard it is. But life is exactly this — going through it again and again, and slowly learning to master your own mind.

Others may only see how calm you are in a crash. Only I know that I get scared too.

And no matter how experienced you are, the next crash may still rattle you. But as long as each time you notice it a little faster than the last, and figure out a little sooner what you are actually afraid of,

fear stops being your enemy and becomes your best ally.