My portfolio is down 15% and I am panicking. How do you mentally handle market crashes?

Surviving market volatility requires understanding the clear difference between a regular correction vs a full-blown crisis. Many new investors who entered the market recently feel terrified when they see their portfolio drop. It helps to use a specific mental framework to categorize these market drawdowns.

A 10% drop is just a healthy correction. A 15% drop is a standard correction. When it hits 20% we are in a bear market.

A 30% drop is a crisis and 40% is a crash. It is only when the market drops 50% that true panic usually sets in.

Investors often paralyze themselves by waiting for a certain time to invest. But in the market certainty is an illusion. If things are certain then valuations are not going to be good for you then.

Instead of panicking you should adopt the mindset of a business owner. Ask yourself if this current drop will permanently impairs the long-term cash flows of the businesses you own? If the answer is no then the drop is simply an opportunity to buy the same asset at a cheaper price.

The most important skill to practice is to just shut up and wait :) . Inaction is also an action, sometimes a much wiser action.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.