How to manage your emotions when the stock market is crashing

This is probably the most important part of being a successful investor: how you manage the emotions of losses, corrections, and crashes. In this video, I share with you some mental models and scripts I use that help me stay invested even when the markets are bleeding red.
00:00 Intro
00:53 What is a proper portfolio?
02:32 #1: Someone is buying what you are selling
03:31 #2: I get to buy retirement income at a discount
06:22 #3: The market can stay irrational longer than I can stay solvent
09:21 #4: The news headlines aren't talking about YOUR portfolio
12:24 #5: Doing nothing is not doing nothing - it's sticking to the plan
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ABOUT ME: I've hosted a personal finance TV show on the Oprah Winfrey Network, used to be a stockbroker, went to school to become a racecar driver (failed), founded a fintech company that provides financial planning software to financial advisors who want to help more people who don't have lots of money, and I consult with wealth management companies on commercializing applications of behavioral finance. I'm also quite fond of donuts.
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[@PreetBanerjee]

Yay for the audio glitch at 0:34 lol

[@orisaadele5852]

Your channel is great, emails, twitters have sent you a message and would love to hear from you.✍

[@littleninjai222]

Thank you, Preet for the sage and timely advise. "Dollar cost averaging" is what I continuely remind myself. I did nothing in 2008 except maybe invest a little more and benefit well from that.

[@foojae]

Thank you sir for this. I haven’t changed anything in terms of investing whether market is up or down. Just consistent.

[@PreetBanerjee]

That’s a winning temperament. Great to hear!

[@Commando303X]

6:32: This rather sounds like a remark that would be relevant specifically to holding a short position.

[@samspade1841]

My mental model to survive market downturns is a defined benefit pension plan. Allows me to know I have an income regardless of market conditions. Not for everyone but it makes the bumps not as scary.

[@PreetBanerjee]

I know many people who are very envious of defined benefit pension plans (myself included) 😊

[@BenghalCat]

Came here from your show at DCIF2022, loving your videos so far!

[@PreetBanerjee]

Thanks so much! (I’m taking a break from creating content until I finish my thesis so it might be January before a new video is posted.)

[@anonymous1432341]

Hey Preet! Hope you are doing great. Just checking if all is good at your side.

[@PreetBanerjee]

All good! Thanks for asking. I’m working on a huge project and also moving overseas so I have a lot on my plate. I’ll be moving and finishing the project in December so I’ll put out more videos again starting in January

[@maryankitsenko9694]

what is emotion? last time I've felt them was in 2010-2011, if not somewhere before GFC. "it's just money, it's made up" (c) Mr. Toldo from Margin Call

[@jdavid1707]

I wanna be that guy!! great video Preet. unbelievably great content and quality.

[@tylerhanson7727]

I believe this as well and sometimes a reminder is needed, thank you.

[@PreetBanerjee]

Agreed. I can't stop being human and so my emotions will always influence me, but having a framework really helps. The deeper a market crashes, it will test almost anyone's resolve so the contrarian framework in this case (buying retirement income at a discount, etc.) helps temper the emotions.

[@lmcgbaj]

What if market is at a discount but you are fully invested and the new funds you can afford to invest at the lower prices are quite small. Discount is good when you have cash. So that is a contradiction to those who say to never sell.

[@TemplarLove]

Awesome video!

[@PreetBanerjee]

Thank you!

[@julesdufour7659]

The best 👊🏻🇨🇦💰

[@cherylhurst]

Omg was that baby preet 😭😭

[@ryanshannon6527]

Yeah I just stopped looking. I believe in the couch potato podcast it was called "benign neglect".

[@Potato0t2]

The mental model of "it's on sale" doesn't work for stocks -- yes, and I believe part of that is because /the price is the product/ with stocks, at least for many people. You're buying an investment so the price goes up, but beyond that people may not think of the basket of real businesses that are behind that number going up. So when the number stops going up, it's scary, vs thinking about the (more abstract) basket of businesses that you're buying for less. I love this reframing of buying (changing your phrasing slightly) more units of retirement income. I don't think I've ever heard it framed that way, and am 100% going to steal this. And of course love the "doing nothing is part of the plan"!

[@PreetBanerjee]

Likewise, I like your framing of the price is the product being a good reason the sale analogy isn’t sticky for many. Very good perspective. Thanks, John!

[@anonymous1432341]

Preet strikes again!

[@PreetBanerjee]

I’m vengeance

[@wealthiness]

I have a high risk high reward portfolio (the majority is crypto) and I've been up to 99% down on a couple, I don't feel much emotion and just continue to hold & if I have more funds to use I would buy more.I never understood why people get scared and cash out at a loss especially when the dollar is loosing value too.

[@tomdzeri3590]

This guy is legen .... wait for it - dary. Legendary!!! Thank you so much and big thumbs up from Bosnia and Herzegovina. I am recommending this channel to all of my friends

[@PreetBanerjee]

That is high praise, Tom! I’m just on a break until the New Year but I’ll be publishing new content again soon. Thanks for being here!

[@stonkoutreach2058]

We love your fresh insight into the financial market. Let's collab. Stonk Tech is a social media platform start-up and our app will be launching soon. Help us promote! Check ur email for more detail(might fall into junkbox)