The DOs and DONTs of Market Crashes



My Sunday Washington Post Business Section column is out. This morning, we look at the “DOs and DONTs of Market Crashes.” The print version had the headline “Do’s and don’ts of a big crash,” which is kinda funny, considering we are barely off of the highs by 10%.

Here’s an excerpt from the column:

“As of this writing, U.S. markets are down about 5 percent for 2016. European bourses are off about the same amount, as is Asia. China, whose market crash started this all off, is down 12 to 15 percent.

Given this week’s surprise, and how it cascaded around the world, it is as good a time as any to discuss what you should — and should not — do during a crash. (Print out this column. Read it again when the next one comes along).”

As I note in the piece, there are some specific DOs and DONTs of any sort of correction or crash, an we detail them:

DOs and DONTS of a market crash

1. DO notice how cyclical markets are
2. DONT react emotionally
3. DO stick with your plan
4. DONT rely on gurus, shamans or talking heads
5. DO note your own state of mind
6. DONT take actions while in a state of discomfort
7. DO notice the panic around you
8. DONT try to time the markets
9. DO look for signs of capitulation
10. DONT confuse the short term for the long term

Bonus: DO have a sense of humor

The key takeaway are all common sense observations as to what gets investors into trouble, and why they must avoid these bad behaviors.

Go read the whole thing . . .




The do’s and don’ts of a market crash
Barry Ritholtz
Washington Post, January 10, 2015

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  1. catman commented on Apr 3

    Thanks all. Sometimes I miss the Bronx.

  2. btowers commented on Apr 3

    Wow, that background beat really sounds like a drum.

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