What Should You Do When Your Investment Drops 10–20%?
If you’re currently going through a drawdown, this might help.
The Nasdaq has been down for a while now.
If I rewind to March or April 2025, the market didn’t feel any easier back then.
But this time, my emotions feel… steadier. Maybe it’s just experience.
Not long ago, I wrote about AI and tried to take a more optimistic view：
My thinking was simple: instead of worrying about being replaced by technology, maybe it’s better to find a way to participate in it.
Looking back now, investing in tech stocks is, in some sense, one way of participating.
Over the past six months, my Nasdaq index fund went from a peak gain of 47% to a drawdown of about 13%.
It’s not devastating—but it’s enough to make you uneasy.
A few days ago, I felt the urge to act.
I even considered doubling my regular investment.
That feeling was familiar—
as if being just a bit more decisive would let me catch a “better entry.”
But in the end, I held back.
When markets fall, I remind myself there are only a few basic options:
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Keep investing steadily (dollar-cost averaging)
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Adjust position size
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Hold more cash
Simple ideas. Not easy to execute.
I opened the 3-year and 5-year charts of my fund.
Suddenly, this pullback didn’t seem like much.
What concerned me wasn’t the market—
it was my own behavior.
Over the past five years, I haven’t always been disciplined.
More than once, I added positions when I felt confident, trying to “buy the dip.”
But later, when cash flow got tight or life expenses came up, I exited early.
After repeating this cycle a few times, a lot of potential gains quietly disappeared.
The truth is, most of these lessons aren’t new.
But there’s always a gap between knowing and doing—and that gap can take years to close.
I’ve come to realize that market volatility isn’t the hardest part.
Human nature is.
When buying, you can always find reasons.
When selling, you can always justify it.
With real money on the line, both fear and greed get amplified.
And if you keep acting on those emotions, it’s easy to fall into a pattern:
Repeating the same mistakes at a slightly lower level each time.
That’s not where I want to stay.
So this time, I’m choosing to slow down.
I’ve set a clearer rule for myself:
If the drawdown approaches 20%, I’ll consider increasing my position.
Until then, I stay patient—and keep some cash in reserve.
No rush to enter.
No illusion of timing the exact bottom.
Just trying to move more slowly—
both on the way in, and eventually, on the way out.
I’ve also been through longer downturns.
From December 2021 to July 2023, the market kept falling for what felt like forever.
During that period, many people—including myself—made less-than-ideal decisions:
Because of cash flow pressure
Because of emotional stress
Because of uncertainty about the future
Looking back, those decisions weren’t entirely irrational—
but they did come at a cost.
If the market rebounds soon, will I regret not being more aggressive?
Probably.
It’s hard to completely escape human nature.
But compared to missing some upside,
I’d rather avoid losing control again.
For now, I’m keeping about 30% invested (mainly Nasdaq 100 and S&P 500).
If the market doesn’t offer a better entry point, I can live with that.
Because for most people, predicting the market is extremely difficult.
And maybe what matters more than being right about direction is:
finding a pace you can live with over the long term.
This is a personal reflection, not financial advice.
Markets involve risk. Please make decisions carefully.
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