How to Stay Calm When Your Investment is Crashing

Disclaimer: This post does not constitute financial advice. Do your own due diligence before making an investment.

Investments can be a lot of things. It could be your time, money, sanity (in many cases), or anything else you can contribute to a project.

Whether you’re investing in stocks, real estate, or your friend’s new frozen yogurt business, it can be stressful. If it were a sure thing, everyone would be doing it.

The entire point of an investment is there is some amount of risk associated with the outcome. There’s almost always a possibility of things going sour. But, if you believe in your thesis and the product, you can learn how to stick out a rocky investment.

Let’s say you invest in a stock. Seems sturdy, safe, and secure. It suddenly goes down. You freak out and want to pull out all your money, because you want to cut your losses. You’re down 10%, but it could get worse. This is when you must consider your thesis.

If you believed in this company, and the stock randomly goes down, that doesn’t mean the company is suddenly worth less. If there isn’t anything going on with the company or the news that would make you expect changes, it could just be getting manipulated.

Hedge funds manipulate stocks all the time to get what they want: Profit. They can throw around huge amounts of money to get the results they prefer. Sometimes it backfires, such as in the GameStop debacle.

If stocks are sold, the price goes down. If stocks are bought, the price goes up. If a hedge fund has vastly more money as the company is worth, it can keep dumping shares, let the price drop, and scare away other investors. As more and more people sell, the lower it goes. Especially when investors have stop-losses set.

If you’re on a free app, they might sell your stop-loss information to hedge funds. They use this info to crush the stock and trigger your stop-loss.

Then, once the stock drops, hedge funds will buy everything back and the stock will rise right back up.

So, you must be confident in your thesis and believe in your investment.

If a stock, a company, or a real estate investment is going to be successful, there’s not much hedge funds can do in the long run. In the short run, it can be manipulated. But if the progress is there, the stock will follow.

As a company rises in value, so does its stock. You must keep this mindset if you’re going to outlast a downturn.

Here: Look at this relaxing puppy photo. It’ll calm you down.

Here are some things you should look at.

Is the entire market down? If your stock is down, you should make sure it’s not just a poor market period.

Is the company in jeopardy? If you genuinely think the company is going out of business, then you can consider freaking out and selling. But this is rare. Most times you’ll know for sure if a company is genuinely going under in the news. If the stock is going down for no reason, don’t fret. Wait it out to see if your thesis pulls through. It might take months or years to pay out.

You need to keep a calm disposition when investing in the stock market. If you’re easily shaken, it’ll be a tough time waiting out your investment.

Try to limit the amount of time you spend caught up in the stock. If it’s your job, then sure, watch it every second of the day. But if it’s a long-term investment, there’s no point looking into it every hour of the day.

The ebbs and flows of the market will impact the price. But not in the long term. Unless you’re a day trader, stop looking at your positions so often. It does nothing but freak you out.

If a company is good, the stock will rise. Pour some tea, take a chill pill, and let your investments work themselves out. If you can’t handle the pressure of waiting, get someone else to do it for you. Banks are trained to follow the stock market and invest your money where it needs to go.

This can apply to any type of investment beyond the stock market. If there’s no reason for your home value to be lowering, just wait it out. Wait until there’s a better market to sell in.

The economy is a fickle menace in the short term. But in the long term, you can count on it. If you think your investment will turn out well, don’t spend time worrying about manipulation that’s out of your control.

Set specific times to check in on your investments and remember who you are! You wouldn’t have put your money in something you didn’t believe in in the first place. If an investment is out of whack, there’s often nothing you can do but wait.

Stay true to yourself and trust your instincts (not the ones that make you panic, the calm ones).

You can do this.

You believed in the Tooth Fairy for seven years, you can believe in yourself for seven weeks.