How to Invest During a Market Downturn

When the stock market crashes, I see two types of investors: those who panic and sell at a loss, and those who buy quality investments at a discount and build wealth. Whether it was the 2022 crash, the 2020 pandemic meltdown, or the 2008 financial crisis, history has shown that downturns create some of the best buying opportunities.

I’ve learned that the key to surviving and thriving during market crashes is having a strategy in place. Without one, it’s too easy to get caught up in fear and make emotional investment decisions. That’s why I follow two core investment strategies—passive and active—which help me take advantage of the market instead of falling victim to it.

1. The Importance of a Financial Strategy

One of the biggest mistakes investors make is going into the market without a plan. It’s easy to follow random internet advice or react emotionally when stocks take a hit, but that’s a fast track to losing money. I focus on having a clear financial strategy that keeps me grounded and prevents me from making costly mistakes.

There are two approaches I use:

• Passive Investing: I follow the ABB (Always Be Buying) strategy, which means I invest consistently no matter what’s happening in the market.
• Active Investing: I apply the POOP (Panic leads to Overselling leads to Opportunity leads to Profit) strategy, which helps me find undervalued assets when markets crash.

2. My Passive Investing Strategy: ABB (Always Be Buying)

If you want long-term wealth without stressing over market fluctuations, this is the strategy I recommend.

What is ABB?

• I invest in the stock market consistently, no matter what’s happening.
• I automate my investments weekly or monthly into broad-market funds like the S&P 500 (SPY) or Total Market ETFs (VTI).
• I ignore short-term volatility and let my investments grow over time.

Why ABB Works

The stock market historically rises over time, even after major crashes. By investing consistently, I naturally buy more shares when prices are low and fewer when prices are high. This keeps me from trying (and failing) to time the market.

If you’re a passive investor like me, the best move during a crash is simple: keep buying.

3. My Active Investing Strategy: POOP (Panic → Overselling → Opportunity → Profit)

For those who want to take a more hands-on approach, here’s how I actively invest during market downturns.

What is POOP?

• Panic selling happens – People dump stocks out of fear.
• Overselling creates opportunities – Great companies get dragged down with the rest of the market.
• Opportunity arises – I look for fundamentally strong stocks that are now undervalued.
• Profit comes later – As the market recovers, these investments skyrocket in value.

Example: In March 2020, stocks like Amazon, Tesla, and Apple tanked due to the pandemic. While others sold in fear, I saw an opportunity to buy at a discount. A year later, those stocks had bounced back and delivered massive returns.

If you want to follow this strategy, the key is to analyze investments carefully before buying.

4. How I Analyze Investments Before Buying

Just because a stock is cheap doesn’t mean it’s a good buy. Before I invest, I always check:

• The CEO & Management – Is the leadership strong?
• Financial Statements – Are profits growing or shrinking?
• Earnings Reports – How has the company performed over time?
• Valuation – Is the stock overvalued or undervalued compared to historical trends?

I focus on high-quality companies that are temporarily undervalued rather than chasing anything that looks “cheap.”

5. Why Long-Term Investing Wins Every Time

No matter how I invest—passively or actively—I always think long-term.

Why?

• The S&P 500 has averaged 10% annual returns for decades.
• Even after recessions, the market always rebounds to new highs.
• The biggest gains go to those who hold steady instead of panic-selling.

Personally, I invest every single week, whether the market is up or down. I also increase my investments during downturns to take advantage of lower prices.

This strategy has allowed me to build wealth while avoiding emotional decisions.

6. Investing in Financial Education is My Best Investment

Jaspreet Singh says, “Your best investment is in yourself.” I 100% agree.

The more financial knowledge I gain, the better my investment decisions become. That’s why I:

• Read books on investing and money management.
• Follow trusted financial news sources (like Market Briefs).
• Watch finance videos to learn from experts.

If you want to build wealth and invest wisely, learning about finance is just as important as investing itself.

Final Thoughts: How to Succeed in Market Downturns

• Market crashes aren’t the end of the world—they’re an opportunity.
• If you’re a passive investor, stick to ABB (Always Be Buying).
• If you’re an active investor, look for POOP (Panic → Overselling → Opportunity → Profit).
• Don’t let emotions drive your investing decisions.
• The market always recovers, and long-term investors always win.

I follow these strategies because they help me build wealth while keeping my emotions in check. If you want to navigate market downturns successfully, I highly recommend finding an approach that fits your personality and risk tolerance.

Now, go out there and invest with confidence!

Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.