What should I do in a market downturn?

I understand how downturns in the market can cause doubt. I can’t stress how important it is to be patient during these times and to stick with a plan of buying good companies at bargain prices. The patient investor almost always outperforms the anxious investor in the long run.

Keep in mind that most declines are relatively short and temporary, but at times like these it could be very helpful for you to think about some things that Warren Buffett stresses (It’s very helpful for me):
https://www.sarwa.co/blog/warren-buffett-quotes

Also, focus on the progress that you’ve made so far. How much in realized gains have you made?
Is this better than your previous results or your fund manager’s previous results as compared with some benchmark such as the S&P 500? (statistically, over 70% of fund managers fail to beat the S&P 500).

The unrealized losses/gains DO NOT mean anything.
It’s not money-in-hand. It changes second by second. You can look at it merely as a gauge of if you want to sell or buy, but don’t worry about it otherwise.

I recommend reading Benjamin Graham’s Mr. Market story again and often. It will give you a better perspective about understanding the stock market.

Here it is for your convenience:

Warren Buffett on “Mr. Market”

Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.

…[A]n investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben’s Mr. Market concept firmly in mind.

Source: Letter to Shareholders, 1987 Berkshire Hathaway Annual Report

I hope this info is helpful for you.
-Grant

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