Contrary to final belief, stock crashes are the best time to buy. I wouldn’t call the recent downturn in stocks a crash. A 10% correction and a crash are two different things.
The first thing to do after a stock crash is to stay away from anything to do with stocks. Don’t call your broker, don’t turn on CNBC, don’t go on Yahoo Finance,etc… This will probably scare you and cause a massive liquidation of the portfolio, which is the worst thing to do. Wait at least one week before thinking about stocks.
The second thing to do is to make a shopping list of the best stocks. After a real crash, every good stock can be had for a good price. Don’t expect the stock to rise quickly. In may take five or ten years, but eventually the stock will rise if the company is a good company.
The third thing to do is to buy the stocks you put on your list. The important thing to remember is that you are in it for the long run. Investing is a long-term game. Eventually the good companies will rise to the top. Just don’t buy on margin. It may be tempting to to borrow to buy more, but it probably won’t be worth it with the market falls anymore.
The most important thing to remember is to not panic. Being scared never makes anyone money. Just remember, the crash is the worst part of the fall.