Should you keep investing when the market drops? In almost every case, yes. Selling during a downturn locks in your losses and means you’ll likely miss the recovery. The investors who come out ahead aren’t the ones who timed the market perfectly — they’re the ones who stayed in consistently, even when it was scary.
The market went red today. Like, really red.
The Nasdaq dropped over 4%. The S&P 500 shed 2.6%. Your portfolio probably looks like a scene from a horror movie right now, and if your first instinct was to check your app, grimace, and start Googling “should I stop investing” — you’re not alone, and you’re not wrong for feeling that way.
But here’s what I want you to know before you do anything: a red day doesn’t mean the sky is falling. And the worst financial decision you can make right now isn’t investing — it’s panicking.
Let’s talk through what’s actually happening, what it means for your money, and what you should (and shouldn’t) do about it.
What Actually Happened Today
Today’s drop wasn’t caused by a recession, a financial crisis, or anything fundamentally broken about the economy. The trigger was a surprisingly strong jobs report — the US added 172,000 jobs in May, nearly double what economists expected.
Good news, right? In theory. But strong employment data makes the Federal Reserve more likely to raise interest rates rather than cut them, because a booming job market can fuel inflation. Higher interest rates make tech stocks — which make up a huge chunk of the Nasdaq — less attractive to investors. So they sold. Fast.
That’s it. That’s the whole story. A good jobs number spooked the tech sector, and the ripple effect felt dramatic.
This is not 2008. This is not COVID March 2020. This is the market doing what markets do: reacting emotionally to new information, overcorrecting, and eventually finding its footing again.
Why Your Brain Is Telling You to Sell Right Now
Let’s be honest about something: the urge to pull your money out when the market drops is completely human. It’s not a sign that you’re bad at investing. It’s a sign that you have a brain wired for survival.
Psychologists call it loss aversion — we feel the pain of losing money roughly twice as strongly as we feel the pleasure of gaining the same amount. So watching your portfolio drop $500 feels significantly worse than watching it gain $500 feels good.
This is also why most people buy high and sell low — the opposite of what you’re supposed to do. They invest when the market is up and exciting. They sell when it drops and feels terrifying. Then they miss the recovery.
You’re not broken for feeling this. You just need to know that your gut instinct in moments like this is almost always the wrong financial move.
What History Actually Shows Us
Here’s the thing about market drops: they end.
Every single major crash in modern history — 1987, 2001, 2008, 2020 — was followed by a recovery. Not always quickly. Not always smoothly. But it came.
The S&P 500 has delivered an average annual return of around 10% over the long term, but that average includes every crash, every correction, every blood-red day like today. The return assumes you stayed in through all of it.
The investors who panicked and sold during the COVID crash in March 2020 locked in their losses — and then watched the market recover to record highs within months. The women who kept investing through that terrifying spring of 2020? They’re sitting on significant gains today.
The wealth gap between people who stay invested and people who time the market isn’t small. It’s enormous.
Dollar-Cost Averaging: Your Built-In Superpower
If you invest a set amount on a regular schedule — say, $100 every month into your Roth IRA or brokerage account — you’re already using one of the most powerful strategies in investing. It’s called dollar-cost averaging, and a down market is actually when it works in your favor.
Here’s why: when prices drop, your $100 buys more shares than it did last month. When prices recover, those extra shares are worth more. You’ve essentially bought on sale.
A down market isn’t a reason to stop investing on schedule. If anything, it’s a reason to feel quietly good about your regular contributions.
What You Should Actually Do Right Now
Let’s make this practical.
If you’re a beginner investor: Do nothing. Seriously. Log out of your investment app if you have to. Your time horizon is long. Today’s drop is a tiny blip on a chart that will look very different in 10 years.
If you invest on a regular schedule: Keep going. Don’t skip this month’s contribution. You’re buying at a discount.
If you have an emergency fund: Good. This is exactly why you have it — so you never have to sell investments to cover an unexpected expense during a downturn.
If you don’t have an emergency fund yet: This is your sign to build one before you invest more. Three to six months of expenses in a high-yield savings account means market volatility never becomes a personal financial emergency.
If you’re thinking about starting to invest: A down market is actually a decent time to begin. You’re buying in at lower prices than last week. The “wait until the market stabilizes” strategy sounds sensible but usually means waiting until prices are high again.
The One Thing You Shouldn’t Do
Don’t sell.
Unless you genuinely need the money right now for a real emergency, selling during a downturn means you’ve officially locked in your loss. The drop only becomes permanent if you exit before the recovery.
“But what if it keeps dropping?” It might. Markets can decline for months. But unless you know exactly when the bottom is — and nobody does — selling now means you also have to decide when to get back in. And most people get that wrong too, waiting until prices have already recovered before they feel safe enough to reinvest.
The math on staying invested almost always beats the math on trying to time it.
A Note About What This Isn’t
Today’s drop is not a signal to panic. But it is a reasonable reminder to check a few things:
- Is your money invested in a way that matches your actual timeline and risk tolerance?
- Do you have an emergency fund so a market dip doesn’t become a cash flow crisis?
- Do you understand what you’re invested in well enough to stay calm when it drops?
If the answer to any of those is “no” or “I’m not sure,” that’s not an emergency — that’s just your next homework assignment. And we’ve got you.
The Bottom Line
The market dropped today because a strong jobs report made investors nervous about interest rates. It was dramatic. It felt bad. It is not the end of the world, your portfolio, or your financial future.
The women who build real wealth aren’t the ones who figured out when to get out. They’re the ones who stayed in — consistently, calmly, month after month — through every red day, every scary headline, every moment their gut told them to panic.
This is one of those moments. Stay in.
Ready to Build a Portfolio Worth Staying In?
If today reminded you that you want to understand your investments better — not just watch them go up and down in confusion — here’s where to start:
Grab the free beginner guide — From Zero to Investor A plain-English walkthrough of how to start building your stock portfolio, even if you’re starting from scratch.
Already past the basics and ready to track your investments properly? The Rich Auntie Portfolio Tracker — $17 Track your holdings, dividends, goals, and performance in one beautiful spreadsheet built for real women investors.
FAQ
Q: Should I sell my stocks when the market is dropping? Almost never. Selling during a downturn locks in your losses and means you’ll miss the recovery. Unless you need the cash for a genuine emergency right now, staying invested is almost always the smarter move.
Q: Is a market drop the same as a recession? No. A market drop is a single-day or short-term decline in stock prices — it can be triggered by news, earnings reports, or economic data. A recession is a broader economic contraction that typically involves GDP declining, rising unemployment, and reduced spending over months. The two can overlap, but a bad market day doesn’t mean a recession is here.
Q: What is dollar-cost averaging and should I use it? Dollar-cost averaging means investing a fixed amount on a regular schedule, regardless of what the market is doing. It works in your favor during downturns because your money buys more shares when prices are lower. If you invest monthly, keep going — you’re buying on sale.
Q: How do I know if my investments are right for my risk tolerance? Ask yourself: if my portfolio dropped 30% tomorrow, would I be able to stay calm and keep investing? If the answer is no, you may be invested too aggressively for your comfort level. A good starting point is low-cost index funds, which spread your risk across hundreds of companies at once.
Q: Should I invest during a potential recession? Historically, some of the best buying opportunities happen during economic downturns, because prices are lower. If your emergency fund is solid and you’re investing money you won’t need for 5+ years, continuing to invest through a recession has almost always paid off in the long run.
Nothing in this post constitutes financial advice. All examples are illustrative only. Please consult a qualified financial advisor for personalized guidance on asset allocation and investment strategy.
