A strong performance from a range of ASX shares today sees the All Ordinaries Index (ASX: XAO) up 0.34% at the time of writing.
With the All Ords now in the green for the third consecutive day running, the Aussie stock market is edging further away from a technical correction.
While there's no universally accepted definition, a stock market correction generally refers to a pullback of 10% (or more) from recent highs. A crash, on the other hand, requires a pullback of 20% or more.
The All Ords is currently down 7.8% since the recent highs on 14 February.
Still, despite the past few days' reprieve, this last month's volatility has been understandably unnerving for many investors.
And it may have seen you asking, what do I do when my ASX shares are falling?
If your first impulse is to hit the sell button during a market dip, you may want to reflect on some investing advice from Warren Buffett.
"Embrace what's boring, think long-term, and ignore the ups and downs," the legendary investor famously said.
While that may be easier said than done, Sonya Williams, co-founder and co-CEO of Sharesies, says market ups and downs "are all part of the ride".
Riding the ups and downs with your ASX shares
"It's been a bumpy few weeks for the share market," Williams told The Motley Fool.
She noted that volatility has been stoked by United States President Donald Trump's swings and roundabouts on tariffs, a potential trade war, and concerns that the world's biggest economy is headed for recession.
"If you're new to investing or still finding your feet, it's completely normal to feel a bit rattled when you see your portfolio dip," Williams said. "But market ups and downs are all part of the ride, and they don't need to throw you off course."
If you found yourself regularly checking the performance of your ASX shares during the recent pullback, that could be a mistake. Instead, have a look at their historic performance and take a step back, Williams recommends.
"When markets dip, one of the best things to do is zoom out," Williams told us.
Williams added:
Over history, markets have weathered world wars, recessions, and pandemics and have bounced back. It's a great reminder that investing is a long-term game and holding for 10 years or more gives you more time to ride out the ups and downs.
It's also worth remembering that unless you sell, a drop in value is just that, a drop on paper. You still own the same number of shares. So, unless you need the money right now, sometimes staying put, and letting time do its thing, can be a smarter move than reacting out of fear.
Diversify and invest regular fixed amounts
Williams also highlighted a few golden investing rules that really can help keep you on track when market corrections see your ASX shares go backward.
First, don't put all your investment eggs in one basket.
"A well-diversified portfolio that is spread across different industries, countries, and asset classes another way to help smooth out the bumps when markets dip," she said.
Williams added, "If you're feeling unsure about when to invest, dollar-cost averaging – investing a set amount regularly – takes the pressure off trying to 'pick the right moment'."
It's also important to remember why you bought your ASX shares in the first place. Unless something has fundamentally changed for one (or more) of the companies in your portfolio, your original thesis should still hold true.
"While market drops never feel fun, they don't have to throw you off track," Williams said.
"Keeping perspective, thinking long term, and sticking to a plan are powerful tools in any investor's toolkit."
