4 Strategic Moves to Make While the Market Is Down
Market downturns feel unsettling, but once we take a step back and maintain perspective, we realize that they also open the door to strategic, long-term moves!
Let’s talk about 4 smart ways to be opportunistic of a sudden market decline.
“..Be Greedy When Others Are Fearful”
We know the drill.. when the stock market goes down, fear often rises—and understandably so.
Watching one’s account balances fall can trigger a powerful emotional response that leads many investors to want to “do something,” often by moving to cash, changing allocations, or trying to time a recovery.
However, history tells us that reacting emotionally to market volatility rarely leads to better outcomes.
In fact, some of the best financial decisions are made during downturns—when things feel the most uncertain.
Look no further than Warren Buffett, one of the most successful investors and businessmen of all time.
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
That latter part of his quote is applicable here.
When others are selling out of fear, expecting to be able to re-enter the market at a “better” time, instead, be “greedy” or opportunistic and maintain perspective on what typically happens during market pullbacks.
The 4 Moves
I’ve teased it long enough, here are the four strategic moves that I believe you should consider while the market is temporarily down, especially if you’re nearing or in retirement:
1. Add to Your Investment Accounts While Prices Are Lower
If you have cash on the sidelines—beyond what you need for your emergency fund and near-term earmarked goals—a market downturn can be a great time to put it to work.
Think of it this way: when stocks are down, they’re essentially “on sale.” Buying during these times can lead to outsized gains when markets recover, and historically, they always have.
It’s not easy to want to invest money when it feels like everyone else is selling.
But those who consistently invest during downturns often benefit the most from the eventual recovery. If you’re investing with a long-term view, this kind of disciplined action can be a powerful wealth-building move.
2. Rebalance Your Portfolio Thoughtfully
This ties in nicely to number 1.
When markets are volatile, it’s common for your portfolio to drift from its original allocation. Stocks may drop in value more than bonds, for example, causing your portfolio to become more conservative than you intended.
Rebalancing—selling from areas that are overweight (which might be bonds right now) and buying into areas that are underweight—helps bring your portfolio back in line with your goals and risk tolerance.
Rebalancing during a downturn can also mean buying assets that have dropped in value, effectively “buying low.” And it prevents emotional decision-making from quietly altering your overall investment strategy.
3. Use Tax Loss Harvesting to Your Advantage
No one likes seeing red in their portfolio—but if you hold investments in a taxable account (non-retirement investment account), you may have an opportunity to put those temporary losses to good use.
By “harvesting” those losses (i.e., selling investments that are currently down), you can offset realized capital gains elsewhere in your investment portfolio (or real estate gains) or even reduce ordinary income by up to $3,000. Any unused losses can be carried forward to future tax years indefinitely.
You’ll want to be careful to avoid the wash sale rule, which disallows the loss if you buy the same (or a “substantially identical”) security within 30 days before or after the sale. But with careful planning, this can be a valuable long-term tax savings strategy—especially during market dips.
4. Consider Roth Conversions While Market is Down
If a Roth conversion was already on your radar this year, a market decline might make it more attractive.
When prices drop, you're able to convert more shares for the same dollar amount, effectively shifting more future growth into your tax-free Roth IRA.
That means when the market eventually rebounds, those gains happen in your Roth—where they’ll never be taxed again. Plus, because the value being converted is temporarily lower, the immediate tax cost of the conversion could also be reduced.
This is a particularly useful strategy for retirees in low income years, or for those looking to reduce future Required Minimum Distributions (RMDs) and the tax burden that comes with them.
This is also useful for people who utilize the Backdoor Roth strategy.
Why Behavior Matters More Than Markets
All of these strategies require something that’s surprisingly difficult: keeping a clear head when markets are rocky.
Behavioral psychology tells us that people tend to feel losses more intensely than they enjoy gains (negativity bias).
That means we’re hardwired to want to react when we see our investments drop—even if it goes against our best interests.
Having an objective, impartial party in your corner can make a meaningful difference.
As a financial planner, one of my most important roles is helping clients manage their emotions, maintain perspective, and make decisions that support their long-term endeavors—even when it feels uncomfortable in the short term.
Timing the market doesn’t work. It’s about making thoughtful, tax-smart, and forward-looking decisions while others are reacting emotionally.
Have any questions about what you’ve read? Let’s talk about them!
Read My Other Work!
