News & Trending Investing News

6 Simple Reasons You Should Stop Freaking Out About the Stock Market

It seems there’s nothing but bad financial news these days, but you shouldn’t freak out.

tensioned investors analyzing crisis on stock market
Updated Oct. 28, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Headlines about market volatility and economic uncertainty can spark anxiety. But when it comes to the stock market, panicking is rarely the best course of action.

Of course, when times get tough financially, it’s natural to feel uneasy about your investments, which is why you can get ahead financially by making wise choices. Instead of panicking when there are economic uncertainties, understanding the bigger picture can help ease those concerns.

Here are six reasons why staying calm and focused during challenging times can actually work to your advantage.

Steal this billionaire wealth-building technique

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.

If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)

You can buy stocks for less

fizkes/Adobe Euphoric young indian girl celebrate online victory

If you’re not retired yet, you’re probably still investing through your work 401(k) or in your own personal IRA. And while seeing the balance fall is never fun, it’s actually a great opportunity to buy while stocks are on sale.

If you’re investing in good companies with a long-term track record, short-term volatility presents an opportunity. As investors sell off their holdings and prices plummet, you can scoop up low-priced stocks and index funds at prices not seen in years.

As a bonus, when you buy stocks or funds for less, you’re lowering your overall investment cost. This is a magic of dollar-cost averaging into the market and allows you to buy when stocks are high as well as low.

Over time, your average purchase price is much better than if you only bought when things were good, and your long-term returns will be better than only buying when the market is hot.

Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.

Stock market drops are normal

Viktoriia/Adobe trader sitting at office in front of monitors

Seeing red in the financial markets day after day, week after week can start to wear on your investing conviction. Especially after investing during an unprecedented rally since 2009, over a decade of (mostly) positive returns, and many years returning over 20%.

But instead of panicking while the market is correcting, it’s important to zoom out and look at the big picture. For example, since the 1950s, the average bear market (a drop of 20% or more) only lasts 11 months. And the average decline in those markets is about 30%.

The stock market has always recovered and produced all-time high values after every bear market and recession. While some market crashes take longer to bounce back than others, over the long term, the market continues to go up.

If you’re a long-term investor, it’s important to remember your investing time horizon. If you can weather the storm and continue investing during the volatility, you have a much better chance of coming out wealthier on the other side of this bear market.

The market still returns 10% on average (including crashes)

Africa Studio/Adobe female stock trader with dollar bills in office

The stock market has returned (on average) about 10% per year over the past 100 years. This includes the following market crashes:

  • The Great Depression (1929) – 89% drop
  • The recession of 1937-1938 – 40% drop
  • Flash Crash (1962) – 20% drop
  • Black Monday (1987) – 22.6% (in a single day)
  • Dot-Com Bubble (2000-2001) – 70% drop (NASDAQ)
  • Great Recession (2008) – 51% drop
  • 2020 Crash – 37% drop

These massive financial crises are all included in the 10% market average returns, with much of those returns coming in the aftermath of the crashes.

So yes, markets can (and do) drop significantly, but the average returns make holding on during times of volatility worth it.

Get a free stock valued between $5 to $200

Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.

Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.

Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY2on your uninvested cash3and the ability to buy and sell stocks 24 hours a day, 5 days a week.

Open and fund a Robinhood account and earn up to $200 in stock


You still own the same number of shares

Kateryna/Adobe male crypto trader thoughtfully looks ahead

In a down market, it’s easy to start freaking out about how much money you’ve “lost,” but the truth is, you haven’t lost anything if you don’t sell. You still own the same amount of shares as you did before the market started dropping.

One of the worst things you can do is to sell while the market is falling since timing the market is extremely difficult. You have to be right twice: Once when you sell at a higher price, and again when you buy back in at a lower price.

If you don’t sell anything and let the market recover, you won’t lose any money. You might increase your returns if you continue investing while stocks are falling.

So the next time someone says “how much have you lost in this market?” you can say, “nothing.”

The S&P 500 is not as down as Netflix (or Bitcoin)

Gorodenkoff/Adobe three experienced stock traders talking business

Netflix (NFLX) stock has dropped over 60% in 2022 alone. And several other individual stocks have dropped even more). For investors who own a large number of tech stocks, their portfolios are looking pretty grim.

Crypto investors are hurting just as badly. Bitcoin (BTC), the largest cryptocurrency by market capitalization, was down about 60% in 2022, and other cryptocurrencies were down as much as 90% or more.

But for passive investors, things aren’t looking so bad.

The S&P 500 INDEX was down around 25% for the year in October 2022, but as of September 2024, it's actually slightly up 1.6%. While bonds are hurting due to inflation and interest rate hikes, the Vanguard Total Bond Market Fund (BND) is also showing positive returns now.

This goes to show that diversification is key, and concentrating your investment portfolio into a few stocks can be dangerous. Investing in broad-based index funds containing thousands of companies is a great way to spread your risk across the whole market.

This can lower the overall volatility of your portfolio and help you avoid the scary 80% drops that can come with investing in individual companies.

Warren Buffett says to ignore the market when it’s down

Svitlana/Adobe man giving eyes a break from working on laptop

When the investing world is in a panic, it’s always a great idea to ask yourself, “What would Warren Buffett do?” Considered one of the world’s best investors, Warren Buffett spoke a few years ago on market volatility and how to handle a market that is dropping.

“I would tell them don’t watch the market closely,” said Buffett in a 2016 interview. “The money is made in investments by investing and by owning good companies for long periods of time.”

Warren Buffett also says that trying to day-trade stocks and time the market is not a great strategy, and those who do are “not going to have very good results.”

If you’re invested in good companies or in index funds that hold high-quality companies, Buffett recommends ignoring the market when it goes down.

His investment philosophy is that of a long-term investor, and short-term volatility is simply noise. As someone whose holding company manages hundreds of billions of dollars for investors, Buffett needs to stay calm when market values drop significantly.

So turn off the financial news, stop looking at your portfolio every five minutes, and stop Googling the words “stock market.” When in doubt, just do what Warren Buffett does.

Bottom Line

LIGHTFIELD STUDIOS/Adobe smiling trader holding infographics while standing

In the last few years, the stock market has been a roller-coaster, with significant drops and tons of negative financial news coming out daily. From inflation and oil prices to interest rates and wars, it seems like there’s no end in sight.

The stock market will always have corrections. The economy will always have recessions. And there is always a reason to panic about your investments.

But if you zoom out and look at the last 100 years of stock market history, things become a bit more clear. The market continues to go up over long periods. And investors who “buy and hold good companies” come out on top, as the Oracle of Omaha made clear.

One of the simplest ways to avoid money stress is to just remember that things will get better.

Masterworks Benefits

  • Invest in art like a millionaire for a relatively low cost
  • Art investments have outperformed the S&P 500 by over 131% for 26 years
  • Purchase shares of artwork by top artists
  • Hedge against inflation and diversify your portfolio