When prices tumble and news headlines turn gloomy, resisting the urge to “do something” can feel almost impossible. Watching account balances fall is emotionally draining, even when the logical advice is to stay the course.

The good news: calming, constructive actions exist that don’t sabotage your long-term returns. Instead of reacting with drastic trades, focus on a few deliberate moves that improve resilience, smooth your cash flow and keep your plan on track through rough markets.

Stay Grounded

Volatility is normal, even if it never feels that way in the moment. Markets have always moved in cycles of strong gains, sudden drops and slow recoveries. The danger usually comes not from the decline itself, but from emotional decisions made in the middle of it.

Selling everything after a large decline locks temporary paper losses into permanent ones. Moving entirely into cash also risks missing the recovery, which often begins when sentiment still feels negative. Your goal is not to avoid every downturn, but to avoid turning a routine decline into a long-term setback.

Benjamin Graham, a financial analyst and investing author, writes, “The investor’s chief problem—and even his worst enemy—is likely to be himself.”

Use that reminder as a checkpoint before you change anything. Pause, then take stock of your time horizon, job stability, and current savings rate. That context will guide which of the next steps make sense for you.

Strengthen Cash

If market swings feel unbearable, the problem is often not the portfolio, but the safety net behind it. An emergency fund gives breathing room when life throws surprises like job loss, medical bills or sudden home repairs. Without that cushion, every market dip feels like a threat to daily life.

A common guideline is three to six months of essential expenses in a high-yield savings account or similar safe vehicle. Households with variable income or dependents may prefer closer to nine or twelve months. The goal is simple: be able to pay bills without touching long-term investments during a slump. Building this buffer can start small. Automate a monthly transfer right after payday, even if the first amount is modest. Knowing that near-term needs are covered makes it far easier to leave your investment plan alone when markets lurch.

Rebalance Calmly

Large moves in stocks and bonds can push your portfolio away from its original mix. A period of falling stock prices, for example, may shrink your equity share well below target and leave you unintentionally conservative once markets recover. Rebalancing nudges things back in line.

Start by checking your current allocation against your desired one: for instance, 70% stocks and 30% bonds for a long-term investor, or 60/40 for someone closer to retirement. If markets have pushed you far from those ranges, consider trimming what has held up better and adding to what has fallen.

This process quietly enforces “buy low, sell high” without trying to guess short-term moves. Use new contributions or dividends first so you make fewer taxable sales. In tax-advantaged accounts, rebalancing is usually straightforward; in taxable accounts, weigh capital gains before selling appreciated holdings.

Check Diversification

Volatile periods also expose concentrated bets. Portfolios heavily tilted to a single sector, country or style can drop harder than a broad market index. Use turbulence as a chance to zoom out and see where risk is truly coming from.

A healthier equity mix spreads exposure across company sizes, regions and industries. Blending broad index funds, plus perhaps a small tilt to dividends or value stocks, can help your “team on the field” look more like a balanced lineup than a clump chasing the ball. The goal is complementary roles, not one superstar doing everything.

Use Tax Losses

Downturns create an opportunity that only exists when prices fall: tax-loss harvesting. Selling an investment below your purchase price realizes a capital loss that can offset gains elsewhere and, up to certain limits, reduce taxable income. To keep your strategy intact, replace the sold holding with something similar but not “substantially identical.” For example, selling one broad stock fund and buying a different, reasonably diversified fund can maintain exposure while respecting tax rules. Avoid sitting entirely in cash for a month if you still want market participation.

Tax-loss harvesting is not about churning every position that dips. Focus on meaningful losses, consider trading costs and remember that this tool is most valuable in taxable accounts, not in retirement plans where gains are already sheltered.

Keep Contributing Steadily

When markets fall, the same contribution buys more shares; when markets rise, it buys fewer. Over time, this smooths your purchase prices and reduces the temptation to guess when “the bottom” will arrive. Missing some of the market’s strongest rebound days can materially reduce long-term results, and those days often appear when sentiment is still fearful. Treat contributions like a bill you pay your future self. Adjust the amount if your income changes, but let the schedule run through both calm and choppy periods.

Refine Your Plan

Wild price swings can reveal a misfit between your investments and your true comfort level. If market declines keep you up at night, your portfolio may be taking more risk than your temperament, not just your time horizon, can handle. Rather than react in the middle of turmoil, use this experience as data. Once things settle, consider adjusting your long-term stock-bond mix slightly toward safety, tightening any speculative positions and clarifying how much volatility you are genuinely willing to ride out. Small, permanent tweaks beat big, emotional overhauls.

Conclusion

Market turbulence will always feel unpleasant, but it does not have to derail your progress. Building a solid cash buffer, rebalancing toward your intended mix, using losses thoughtfully, and sticking with steady contributions can turn anxious energy into productive action.