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The investor’s guide to surviving a sharemarket crash

ASX shares are being trashed, again. The temptation is to sell everything and run for the hills. Instead, take a chill pill and consider The Motley Fool’s patented sharemarket survival guide.

Down down, shares are going down, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) headed back towards the 4000 point level.

As if the euro-debt crisis wasn’t enough, we’re now contending with slowing US and Chinese economies.

In the U.S, the S&P 500 (Index: ^GSPC) slumped over 2% in what was the market’s second worse day of 2012.

For all the ups and downs, over the last month All Ordinaries (Index: ^AORD) (ASX: XAO) is largely flat.

That said, some shares have taken it on the chin…

Company One month % Share Price Fall
Qantas (ASX:QAN) (20.3)
Sims Metal (ASX:SGM) (19.8)
Mesoblast (ASX:MSB) (11.3)
Myer Holdings (ASX:MYR) (21.0)
Ten Network (ASX:TEN) (23.9)
Cabcharge (ASX:CAB) (19.8)
Coalspur Mines (ASX:CPL) (36.6)
Aquaris Platinum (ASX:AQP) (35.7)
Flinders Mines (ASX:FMS) (28.6)

So what are the keys to surviving market downturns? Here are two suggestions:

1. Don’t get absorbed in despair and panic. Ignore the violent emotional swings, and instead simply maintain a degree of detachment with regard to the whole business.

2. Be a regular saver and investor. That way, a market downturn becomes nothing more than a buying opportunity.

(As an aside, if you are worried about the market crash, you might want to first check out our new free report, Read This Before The Market Crashes. It could save you hours of heartache, and thousands of dollars. Click here to request your report now, whilst it’s still free and available.)

When bearish volatility, caused by emotions and a lack of reason, leads humans to herd, sharemarkets become irrational and oversold.

That irrationality allows investors who are able to control their emotions and act in a calm, balanced manner, to take advantage of the many opportunities the market throws up.

Let calmness be the winner

There is no need to make big decisions. You don’t  need to be fully invested in, or totally out of the market. Gradually building positions in the best companies while maintaining a cash cushion will make investing easier and less stressful.

Stock market falls are like the seasons of the year. They are a natural part of the investment landscape, they are normal and can even be very healthy.

This latest crisis, like all crises before, will pass. And those that survive will prosper.

If you’re in the market for some high yielding ASX shares, look no further than our Secure Your Future with 3 Rock-Solid Dividend Stocks report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time

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The Motley Fool ‘s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s  free  investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request  your free subscription , whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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