Right now, everyone from top fund managers to finance headlines seems obsessed with calling the next stock market crash.
I'm not.
Every few months, the same cycle repeats — bold predictions, flashing red headlines, and a rush of fear across the market. It's almost a ritual at this point.
But when you step back, you realise crashes aren't rare events. They're a natural part of how markets function — moments of correction that clear excess and reset expectations.
Over the past century, investors have faced wars, pandemics, oil shocks, tech bubbles, and recessions. Each time, it's felt different. Each time, it's felt like this one might be it.
Yet through all of it, one thing has remained remarkably consistent: progress. Innovation, productivity, and human ingenuity have kept pushing markets higher over the long run.
Image source: Getty Images
Crashes are the price of admission
Market downturns are simply the cost of participating in the growth of businesses and innovation. Pessimism and optimism swing like a pendulum: it's part of what makes markets function.
As renowned author Morgan Housel reminds us, "99% of good investing is doing nothing."
That means resisting the urge to act rashly when volatility strikes, and focusing instead on time in the market, not timing the market.
My plan when markets tumble
When markets hit new highs — as they are today — I start preparing for the next inevitable downturn. That doesn't mean predicting when it'll happen. It means making sure I have flexibility when it does.
Personally, I like to build cash reserves when opportunities are scarce, so that I'm ready to buy quality companies when they trade at a discount. My "shopping list" of businesses with strong balance sheets, durable growth potential, and proven management teams is always ready.
When sentiment turns overly negative and share prices reflect panic instead of rational forecasts, that's when I want to be a buyer.
The stock market is the only place on earth where people run away from sales, and I aim to be one of the few who run toward them.
ETFs for steady investors
If buying individual companies isn't your thing, the same principle applies through ETFs. Deploying capital into broad-market ETFs during downturns can be one of the simplest and most effective long-term strategies.
For example:
- iShares S&P 500 ETF (ASX:IVV) provides exposure to leading US companies.
- BetaShares NASDAQ 100 ETF (ASX: NDQ) captures growth in global technology leaders.
- Vanguard Australian Shares Index ETF (ASX: VAS) offers a diversified slice of the ASX 300.
For long-term investors, consistently buying these assets, especially when fear is high, can make the rebound that follows all the more rewarding.
Foolish Bottomline
Crashes will come. They always do. Yet, they're also what make investing work. Without volatility, there would be no risk and, therefore, no reward.
When the next market crash hits, I won't be panicking.
I'll be patient, prepared, and ready to turn fear into opportunity.
