What should I do immediately after the market crashes?
David TalleyUpdated December 9, 2025
Quick Answer
First, do nothing panicked. Market crashes are statistically normal—expect 8-9 in a lifetime. Then, if you have cash, consider buying at lower prices. If you have losses, harvest them for tax benefits. If approaching retirement, review your allocation. The worst thing you can do is sell in fear. The best investors stay stoic and see opportunity where others see disaster.
How you respond to your first real market crash is one of the most critical moments in your financial life.
First, context:
If you live to 90 and you're 35 like me, statistics say you'll live through eight or nine significant market downturns. They are normal. They are expected. They are not the end of the world.
What "significant" means:
When your portfolio goes down by more than what you earned that year. If you make $100,000 and your portfolio drops $100,000, that feels real. That's when you've truly been tested.
What to do:
1. **Nothing panicked.** Seriously. The worst thing you can do is sell. Markets recover. They always have. Selling locks in your losses.
- Consider buying. If you have cash on the sidelines, a crash is a sale. Everything is 20-30% off. If you were going to invest anyway, now's better than when prices were higher.
- Harvest tax losses. This is underutilized. Sell investments at a loss, capture the tax benefit, buy something similar (not identical, to avoid wash sale rules). You get the tax benefit AND stay invested for the recovery.
- Review your allocation if near retirement. If you're 3 years from retiring and you can't stomach this volatility, you may have been too aggressive. Now's a good time to assess.
- Use this as a Roth conversion opportunity. Your IRA is worth less? Convert those same shares for less tax.
The mindset shift:
Can you be stoic? Can you keep your wits? Or do you freak out?
That first crash, and how you respond to it, shapes your entire investing future. Keep this advice handy. You will need it.
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