Here’s how to manage your portfolio in a falling market

It’s getting ugly out there folks. Over the past month the share prices of some of the country’s biggest and brightest companies have been pummelled as post earnings season volatility jumps.

Shares in blue-chip superstars Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) are down over 5% in the last month, while BHP Billiton Limited (ASX: BHP) is down over 6%.

It’s one of the biggest bouts of volatility seen by the S&P/ASX 200 (INDEXASX: XJO) all year. But it’s not the first, and certainly won’t be the last.

So here’s how to survive the falls and make sure you come out on top:

1. Take a few deep breaths

It always stings when we feel like we’re losing money. Even seasoned investors can’t help but feel a little glum at a portfolio lit up in red. Taking a few deep breaths is a simple way to slow the heart rate and clear your head to examine the situation logically.

2. Remind yourself why you bought the company

Despite the wide-spread falls there is a good chance that there has been absolutely no change to the operations of the company you own.

Though some companies, like iron ore monster Fortescue Metals Group Limited (ASX: FMG), may have seen a shift in business conditions, on days of widespread volatility many other companies will not have changed.

It helps to remind yourself what attracted you to the company to start with. That unbeatable competitive advantage? The top management team? That exclusive healthcare patent? Chances are they are the main factors that will remain the same.

Regardless of the share price fall, Telstra customers will still be watching YouTube and Woolworths’ customers are still going to stop in and pick up ingredients for dinner tonight.

3. Put it in perspective

Volatility is a natural part of investing in shares. The last 12 months has been exceptional for many ASX-listed companies with strong results and rising earnings. Expecting long-term volatility will help you come out on top while others are fearful.

4. Take the next step

Building a winning portfolio doesn't stop just because the market is falling. Make sure you are on the right track with The Motley Fool's brand-new FREE guide, "Your 10 Step Guide to Making $1 Million in the Market".

This new, free report contains every detail you need to know now to build your personal fortune! Simply click here to secure your FREE copy.

Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.