Stay or Sell? Checklist for Surviving Market Crashes
Market crashes feel like the end—but they don’t have to be. Stay, sell, or buy more? Use this quick checklist to assess risks, valuations & seize opportunities. 🚀
Your portfolio is bleeding. The market is weak and falling. Panic sets in—should you cut your losses or hold on? The best investors stay calm and assess the facts. Is the business still on track, or have fundamentals changed? This checklist will help you decide—stay, sell, or buy more. The goal? To turn fear into opportunity.
1. Separate Market Sentiment from Business Reality
Market crashes hit even great businesses. The key is separating hype from fundamentals.
Business Execution: Is the company still delivering on its strategy?
Growth Trends: Are industry dynamics still favorable?
Competitive Edge: Does the company retain strong leadership and a market advantage?
If these hold, a falling stock price may be market noise—not a red flag.
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2. Has the Business Landscape Changed?
Not all downturns are temporary. Some signal real shifts. Ask:
Has demand for the company’s products collapsed?
Are new competitors disrupting the market?
Have regulatory or economic shifts hurt profitability?
If fundamentals are eroding, it may be time to reconsider your investment.
3. Valuation Multiples: Overreaction or Justified Drop?
Stocks get cheaper in downturns—but is it justified?
Fear vs. Reality: Is the market wiping out excess optimism, or overreacting?
Historical Valuations: Compare P/E, P/S, and P/B ratios to past trends.
Growth Outlook: Is future growth intact despite current pessimism?
4. When to Buy More vs. When to Exit
Deciding whether to double down or cut losses is crucial.
Buy More: If the business is sound but undervalued, it’s a buying opportunity.
Exit: If the company is weakening or losing its competitive edge, selling may be wiser.
Common Emotional Traps to Avoid
Anchoring to Purchase Price: "I'll sell when it gets back to my buy price" - This ignores business reality
Averaging Down Automatically: "It's cheaper so I should buy more" - Without checking fundamentals
Following the Crowd: "Everyone's selling, so I should too" - Ignores your own analysis
Conclusion: How to Invest in a Market Crash
Great investors stay rational when others panic. The key? Focus on fundamentals, understand valuation shifts, and use downturns wisely.
Market crashes create fear, but they also create opportunity. If the business remains strong, pessimism may be your best chance to buy at a discount.