What to do during market crash
As a long term investor
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I am still working on the Part III of Indo Stocks. If you missed the first part where I talked about currency depreciation, here’s the link. If you missed the second part where I talked about price manipulation, here’s another link. In any case, I think this article is quite apt in the wake of what has been happening from time and time again: market crashes.
Hint: there is a gossip section at the end for paid subscribers.
And disclaimer: This article is not an investment advice. It is only for educational purposes only and should not be taken out of context. I certainly wish that it is helpful for you, our kind reader. Have a blessed week!
On March 19 2025, the Indonesian market experienced a trading halt. This was caused by the sudden volumnious amount of selling that happened, driving prices down.
Amid fear sentiments that are caused by frauds, layoffs and launching of the new sovereign wealth funds purportedly controlled by dubious individuals, now IHSG trading halt might feel like a nail in the coffin. It also triggered an outburst of fear sentiments amongst netizens at large. Numerous social platforms that allow such discourse suggests:
the country is going bankrupt next year
there will be massive amounts of unemployment
and many more bouts of negativity
Your closed ones (friends and/or family) might also be reiterating these points to you. I know, for one, that my Dad is the alarmist in the family. Repeating whatever the news said such as wars, bunch of guys ransacking stores in the U.S., and now Indonesia gelap with plenty of negativity and bleak outlook of the future.
This article is not going to be about commenting the fear, negativity or concerns. This write up is more of a little playbook that I personally use when I am having unpleasant emotions because of market crashes like the one that happened recently. It is a 4-step process that is free, very simple and the aim is to make me (almost) instantly feel better about the current situation.
Also, this playbook is more for long-term investors. If you are a day or swing trader, this playbook may not be entirely suitable for you.
Step 1: Deal with the unpleasant emotion that arises within myself
If you are not feeling unpleasant at all when looking at the market crash and believe that you are calm and have the capacity to think clearly, you can go to step 2.
Before opening your trading app or (hopefully Recompound client dashboard), let’s identify and label the unpleasant emotion. The first and most important step to deal with unpleasant emotions is to first know what you are feeling. You might be feeling unpleasant, but if you don’t know what exactly you are feeling and what is causing it, you may end up venting it to the people around you - you partner, kids, parents, friends may become unknowing and poor victims.
Usually, when receiving negativity from multiple sources (media, friends, family, etc), that negativity will “get” to you as emotions tend to be contagious. That exact feeling is usually labeled as overwhelmed.
To be exact,
Overwhelmed: Feeling like you have been taken over by strong feeling
If you consume multiple bad forecasts and negative coverage, you might also feel apprehensive.
To be exact,
Apprehensive: unease and worry about something (bad) that might happen
These two distinct feelings are high in energy and are unpleasant. Here’s how I handle it to instantly feel better. The tool:
is free
has (almost) instant results
is accessible anytime (when you are awake)
is science-backed (Dr. Andrew Huberman, a neuroscientist from Stanford, champions this tool)
It is called the physiological sigh. It is a pattern of breathing that involves double inhale and an extended exhale. Yes to repeat:
Step 1: Double inhale
Step 2: Extended exhale
I usually do this 2 times and I will become calmer instantly. It reduces the energy of the emotion as it activates the parasympathetic nervous system and it usually gives me the much needed focus to think clearly. Here’s Dr. Andrew Huberman explaining it in 3 minutes.
Step 2: Remind myself about the idea of being invested
Now that I am less apprehensive or less overwhelmed (after doing step 1), we can now remind ourselves about why we are invested. This step for me is even simpler than step 1. All I need to do is to run over 3 facts about my investments:
I have an active income (or savings) to rely on as my source of livelihood
I don’t rely on my current investments as my source of livelihood
I am invested for the long term (multiple years down the road). Although markets crash today, that does not mean that there will be no growth, ever
When I get reminded that investing means buying a business and I think like a business owner, I know that market crash does not have to be the end of the world. But I might still feel concerned:
To be exact,
Concerned: wondering if something is okay
Yes, I don’t have the full picture as of yet if the market crash is okay for my investments. But at least I am now calmer and I am ready to move on to the next step.
Step 3: Evaluate objectively if my businesses will be impacted by the crash
So I will look at my investment portfolio, and look at the investment thesis that I have at the start. For example, I am invested in a said upstream Crude Palm Oil (CPO) company because I believe that:
there is a decrease in number of productive supply of palm trees in Indonesia, which takes long (about 4 - 5 years) to replant and another 4 years to reach a productive tree age — i.e. decrease in supply
there is an increased in demand CPO because of biodiesel subsidies in Indonesia
therefore, CPO prices would be higher for longer and companies with productive trees will benefit from a sustained increase in earnings
Then I will look at the cause of the crash (there will be a gossip section at the end also for paid subscribers). For example, it is because of foreigners selling when interest rates in the U.S. is high. But usually you can scroll through the news and you would see some media coverage about the crash that explains why the crash happened.
Now I will take a look and assess if the crash is causing my thesis to be invalidated.
Is the foreign selloff going to reduce the demand for CPO? If the answer is not clear, we can have a different format:
Is the statement above true or false? Most likely false.
Now we go over all of the businesses that we have invested. And ask the question is the foreign selloffs (purported cause of the crash) invalidating my investment thesis or not?
Shameless plug, if you are a Recompound client you could go to client dashboard, enter your username (found on your personalised WhatsApp group) and go over to the investment thesis section. Then you can go over your investment thesis. Not yet a client? Shame (kidding kidding).
Once we have gone over my investments one by one and the answer is all false, then I will feel calm.
To be exact
Calm: feeling free of stress, agitation and worry
But if it turns out that one of the answers is true (although this is quite rare), then I will always sell that position in the investment.
Step 4: Do I have extra funds to invest for the long term?
After doing step 3 and realising that all of the investment thesis are not invalidated, I will ask myself if I have an extra fund to invest for the long term.
Why long term funds? Because there might be another crash tomorrow, or next week or next month. If I use funds that I need to use next week (for example), another market crash might cause my returns to be bad 😞
If I don’t have an extra fund to be invested for the long term, I guess I will do nothing and I will just go back to work (expanding the active income pie). If I do have an extra fund, I might want to allocate some to stocks that are discounted even more deeply as market crashes like this does not happen every day.
And when you make the investments with a cold fund, especially at a super discounted price with very clear investment thesis, you will feel confident
To be exact
Confident: feeling sure of yourself
Start state: overwhelmed. Reads 4 step playbook. End state: confident. #magic.
Closing Remarks for Free Subscriber
I hope that this 4-step process showcases how you could make use of this playbook to feel from being super overwhelmed and apprehensive about the market, to being calmer or even more confident.
Let me reiterate, unpleasant feelings are usually contagious. You might unknowingly receive it from sources of information that you passively consume which affects your emotional state overall. Instead of escaping it or judging the emotions as bad, it is often more productive to acknowledge it and take concrete measures to deal with it. Often there are cheap and valuable tools at our disposal to regulate our emotions well, especially when life happens.
Managing that unpleasant emotion into a more pleasant is key to keep our day to day more steady.
If you are a paid subscriber, there is still a gossip section as to why IHSG did a trading halt (or at least from what I heard).