What a Market Crash Actually Feels Like When You're Saving for Retirement

In March 2020, I watched my retirement account lose 31% of its value in twenty-four days.

I had been investing for about eighteen months at that point. The account had grown, between contributions and gains, to roughly $35,000. By March 23, the bottom of the COVID crash, it was worth $24,100.

I want to be very specific about how this felt, because every article I read at the time told me to "stay the course" and "don't panic," and none of them really captured the texture of what was happening day to day in my brain.

It felt like I had made a mistake. It did not feel like the market had made a mistake or the world had made a mistake. It felt like a personal mistake — like I had been duped by the people on Bogleheads who told me index investing was safe, and now I was learning that "safe" had been a lie.

I want to walk through what those weeks were actually like, what I almost did, what I'm glad I didn't do, and what I learned by not doing the thing I most wanted to do.

The First Week

The decline started in late February. The S&P 500 had been at all-time highs and then started slipping. The first few days I barely noticed. The financial news in 2020 was full of speculation about how COVID would affect the economy, but the market reaction was relatively muted at first.

By the second week of March, the slippage had become a slide. I was checking my account every morning before work and every evening when I got home. The account that had taken me eighteen months to build was losing more value in a single day than I'd contributed in a month.

I read articles. I read all the articles. The articles all said the same thing: history shows that markets recover, dollar-cost averaging works in your favor during a downturn, the worst thing you can do is sell at the bottom.

The articles were correct. Knowing that they were correct did not make the feeling go away.

The Decision I Almost Made

By March 16, my account was down about 18% from its peak. I had been carrying around a constant low-grade nausea for about a week. I was, embarrassingly, having trouble sleeping.

That Monday morning before work, I logged into Fidelity and I sat on the screen with my finger over the "Sell All" button. I didn't click it. But I came genuinely close.

The thinking, as I now reconstruct it, went something like this. The market is going to keep falling. I should sell now, while I've only lost 18%. I'll buy back in when it bottoms out, and I'll have preserved the bulk of my account.

I want to be clear about how reasonable this thinking sounded to me at the time. It did not sound like panic. It sounded like prudent risk management. The fact that approximately 100% of personal finance literature warns against this exact reasoning did not prevent the reasoning from feeling correct.

What stopped me from clicking the button was, of all things, a tweet I saw later that day. I don't remember who it was from. The content was something like: "Anyone who tells you they sold at the top and bought at the bottom is lying to you and lying to themselves."

That sentence broke something in my reasoning. The implicit second half of my plan — buying back in at the bottom — was something I had been treating as a simple matter of timing. Of course I would buy back at the bottom. Why would I not? But I had no actual mechanism for identifying the bottom in real time. I would just be guessing. And the historical record was clear that almost no one, including professionals, identifies the bottom correctly.

If I sold and didn't time the re-entry correctly, I would have permanently locked in losses that the market would have eventually recovered from on its own.

I closed the browser tab.

What Happened Next

The market kept falling for another week. By March 23 I was down 31%. Then it stopped falling and started rising. By June it had recovered most of the loss. By August it was at new all-time highs.

The recovery was not gradual. It was a series of sharp moves, with several scary fake-recoveries along the way that turned into further declines before the real recovery took hold. If I had sold in mid-March and tried to buy back in based on what looked like a recovery, I would have been head-faked at least twice and likely missed substantial chunks of the actual rebound.

By the end of 2020 my account was at $42,800 — well above where it had been before the crash even started. I had continued contributing throughout the crash, which meant my regular monthly contributions had been buying shares at fire-sale prices. Those contributions ended up being the best-performing chunks of my entire portfolio.

This is what every personal finance article means when they say "don't panic and dollar-cost averaging is your friend." The articles are correct. Living through it is harder than the articles make it sound.

What I Learned

The first thing I learned is that the academic case for not selling in a crash is correct, and the emotional case for selling is wrong, and these two facts are not symmetrical in any way. The academic case is right because it's based on data. The emotional case is wrong because it's based on the feeling that this time is different and you can outsmart it. The feeling lies. The data doesn't.

The second thing I learned is that this lesson is not learnable in advance. I had read every article about market crashes before March 2020. I knew, in theory, that I should not sell. The theoretical knowledge did not prevent the emotional crisis. The only way to actually internalize the lesson was to live through one crash and find out, in real time, what my own brain does when it sees a 31% loss.

I now believe that the first crash you live through as an investor is more important than any book you read. You learn whether you can actually do the thing you've theoretically committed to doing. If you sell, you learn that you couldn't, and you can adjust — perhaps by holding more bonds, or by avoiding certain investments that produce extreme volatility you can't tolerate. If you don't sell, you learn that you can, and the next crash is easier.

The third crash I lived through (briefly, in late 2022) was meaningfully easier than the first one. I felt the same anxiety. The difference was that I trusted the process more, because I had seen the process work. The 2020 experience had given me a calibrated sense of how bad the panic feels and how much it lies.

What I Do Now

A few practical things changed for me after 2020.

I check my account less. During normal times, I look at it maybe once a quarter. During market drops, I deliberately don't look at it for weeks. The account being lower doesn't change what I should do, so seeing it lower only causes anxiety without producing any useful action.

I do not read financial news during market downturns. The financial press during a crash is essentially designed to amplify panic. The headlines get more dramatic, the interviews get more apocalyptic, and the cumulative effect is to make you feel like an action is required when no action is, in fact, required. I've found that not consuming the coverage helps me avoid the bad decisions it nudges me toward.

I keep a written reminder near my desk. When I rebuilt my workspace last year, I wrote on a Post-it note: "If you are looking at the account during a drop, you are not making a useful decision. Close the tab." It sounds dumb. It works.

What I Wish I'd Known in March 2020

The thing I wish someone had told me, plainly, in March 2020 is that the worst-feeling moment of a crash is almost always the moment immediately before the recovery begins. The market does not bottom out at the moment everyone has accepted that the world is ending. The market bottoms out before that, and then goes up while many people are still selling because they think it's going to keep falling.

Selling at the bottom is not a one-in-a-million mistake. It is the modal mistake. It is what most people who try to time crashes actually do, because the worst feelings cluster right before the turn.

If you can resist selling for the duration of those worst feelings, you will, on average, do better than people who sold. The data on this is clear. The trick is that "resist selling" is the entire job during a crash, and the difficulty of doing it is wildly underestimated by people who haven't tried.

What I'd Tell Anyone About to Live Through Their First Crash

You will read articles that tell you to stay calm. The articles are right but they will not feel like enough.

You will tell yourself you can sell now and buy back in at the bottom. You cannot. No one can.

The feeling that you have made a mistake by being in the market is, itself, the mistake. The mistake is not the investment. The mistake is the belief that the temporary loss is permanent.

If you have to do something during a crash, do something that doesn't involve your account. Take a walk. Call a friend. Go to bed early. The single most useful action you can take is to not log in.

The market will recover. Not on your timeline, not in the way you expect, but it will recover. It always has. There is no reason yet to believe it won't again. The version of you in five years will be relieved that the panicked version of you did nothing.

I almost clicked Sell. The fact that I didn't is, in retrospect, the single most valuable financial decision I have made in my life. Worth tens of thousands of dollars, and I made it by doing nothing at all.

That, I think, is the actual lesson. The hardest financial discipline is not action. It's stillness.