How to profit from a market crash

This week on Money and Investing, Mitch Olarenshaw and I discuss how to approach falling stock prices, manage risk, and take advantage of potential gains.

1. Market pullbacks: Threat or opportunity?

Stock market dips are inevitable, but they don’t always signal disaster. Investors can either panic or see the downturn as a chance to buy quality stocks at a discount.

2. Identifying quality investments

Not all stocks recover equally. Understanding why a stock has dropped – whether it’s due to overall market conditions or specific industry trends – can help you make informed decisions.

3. Defensive strategies and risk management

During uncertain times, some investors shift to defensive stocks like utilities or financials. Others use strategies like hedging or shorting the market to manage risk.

4. Cash reserves and timing entries

Keeping cash on hand allows investors to buy into the market when prices drop. A staggered buying approach – investing in stages rather than all at once – can help reduce risk.

5. Managing investor psychology

Fear and greed drive market behavior. Having a solid game plan helps investors stay disciplined and avoid emotional decision-making.

Market cycles come and go, but those who prepare and remain objective can turn downturns into opportunities.

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The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.