The Stock Market Is Crashing. Here's What Not to Do.

The S&P 500 and Dow Jones have been all over the place in March due to the Iran war, surging gas prices, and inflation fears. Your 401(k) is probably looking rough right now.

The natural impulse is to panic and sell everything. Watching your retirement account sink into the red with no bottom in sight makes people want to pull the plug. But that's exactly what you shouldn't do.

Financial experts say panic-selling violates the basic rules of investing. Buy low, sell high. Don't make impulsive moves. Stick to your plan.

Here's what to actually do when markets are falling apart.

Don't Try to Time the Market

It sounds tempting. Cash out when indexes are falling. Sit out the downturn. Reinvest when the markets hit bottom. Wait for the rebound and profit.

The problem is picking the right moment to cash out and cash in.

"Any time you're trying to avoid a downturn, the risk of being wrong is pretty high," said Peter Lazaroff, a certified financial planner in St. Louis. "And you have to be correct twice."

You have to decide when to sell high and when to buy low. Those calls are harder than they sound because the worst days in the market often happen right next to the best days.

"So often, some of the absolute worst days in the market are in close proximity to some of the absolute best days in the market," said Kristy Akullian, head of iShares investment strategy at BlackRock.

Case in point: April 9, 2025, when stocks rose dramatically after several days of losses during Trump's tariff campaign.

"The benefit of staying invested is, you're going to be in the market on the days when there are the biggest gains," said Patrick Means, vice president at a Schwab branch in Dallas.

If you sell during a downturn and miss those big gain days while sitting on the sidelines, you've locked in your losses and missed the recovery.

Stick to Your Plan

Stocks rise and fall; sometimes dramatically. For long-term investors, the best strategy is usually sitting back and letting the drama play out.

Bear markets are usually shorter than bull markets. Since 1966, the average bear market has lasted about 15 months. The average bull market has lasted nearly six years.

A falling stock market is a good moment to remember the basic rules. One of them is don't panic.

Vanguard's investment principles include creating clear goals, maintaining a balanced and diversified mix of investments, minimizing costs, and following your plan with discipline.

"You can't control the markets. You don't know what they're going to do," said James Martielli, head of investment and trading services at Vanguard. "You can control yourself by not making emotional decisions."

Do Nothing

How stocks are doing today shouldn't matter much if you're in for the long haul. And if you aren't in for the long haul, stocks might not be for you.

"If you need funds soon, don't have it invested," said Randy Bruns, a certified financial planner in Naperville, Illinois. "If you don't need the funds for 15 years, stop looking at the volatility."

Market downturns tend to be brief. Recessions are shorter than they seem. Anyone saving for retirement or other long-term goals can generally ride them out.

"If you have the luxury of being a long-term investor, be one," Akullian said.

Consider Buying During the Dip

While experts don't like impulsive trades, stock market dips do create opportunities to buy stocks on sale.

The stock market has been historically overpriced. Bargains are few. A market correction means you're potentially getting a better deal on any stocks you buy now.

If you're worried about volatility of individual stocks, buy broad index funds instead. They're generally less risky.

Another option is looking for stocks that aren't as sensitive to market swings. Some mutual funds and exchange-traded funds are designed to minimize volatility with portfolios that are more predictable than the market as a whole.

The Bottom Line

Your 401(k) is probably down right now. The Iran war, gas prices, and inflation fears are making markets volatile. The S&P 500 and Dow Jones are seesawing.

Don't panic and sell. That locks in your losses and violates basic investing rules.

Stick to your plan. This downturn will pass. If you don't need the money for 15 years, stop checking your account every day. Market downturns are brief. Ride it out.

The worst thing you can do is panic-sell during a downturn. Your long-term investment plan shouldn't change because of a few bad weeks in March 2026.

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