It's normal for investors to feel a bit depressed after seeing their portfolio's value go down, like during the sell-off on Aug. 5. But there's a lot to be done about feeling better and being better positioned for the next time the market slides.
In particular, there's three things you can do right away to offset some of the sell-off blues.
1. Pause
The first thing you should do if you're feeling distraught about the red numbers in your portfolio is to step back, pause, and commit to not doing anything hasty with your investments. Things are rarely as bad as they seem.
More importantly, impulsively selling your stocks during a sell-off or panic often means selling at a loss or cutting yourself off from the chance of a future gain. It's also just bad form.
Even if you aren't panicking, depression after experiencing financial losses is not to be trifled with. Close the browser window and take a walk. Decisions made immediately in the wake of a drawdown are more likely to be shortsighted than prescient.
2. Assess the situation clearly
The next thing to do is to get some perspective on what happened, which of your investments are actually impacted, and why. This will determine your strategy for taking action -- and calculated action is a strong defense against depression.
3. Find the right opportunity for the moment, then act on it
Here's the final thing to do if you've got the sell-off blues: Use the clear headspace you secured by pausing, and the situational awareness you constructed by examining the situation, to determine how to take advantage of the conditions of the sell-off.
