Stock Market Crashes: How to Protect Your Investments From Shocks to the System

After a banner year in 2024 and an upward spike in stock prices after the US presidential election, the stock market has had a terrible spring. Since peaking at 6,411.15 on Feb. 19, 2025, the S&P 500 index — a benchmark for US stocks — has fallen more than 15% over the past 6 weeks.

The shifting tariffs policies of the Trump administration haven’t helped. Yesterday, the White House announced a massive new set of tariffs for countries around the world. Today, US stock prices plummeted so quickly that the S&P 500 lost $2 trillion in just two and a half hours. And the market could be in the red for a while. 

“It is very difficult for businesses to plan in this chaotic tariff environment created by the Trump administration,” said Robert Johnson, CEO of Economic Index Associates and professor of finance at Creighton University’s Heider College of Business. Markets usually react negatively to tariffs, which are taxes on imported goods that usually drive up prices for consumers and stifle global trade.

While escalating tariff threats are eroding both consumer and corporate confidence, cuts to the federal workforce are causing households to curb spending and sparking fears of a recession. “This can result in an economic slowdown,” said Johnson. 

A number of other factors are also contributing to stock market volatility, such as inflation, interest rate forecasts and fears of increased military conflict. Wall Street briefly rallied after the Fed kept its benchmark interest rate steady on March 19, but the forecast for higher inflation and lower economic growth in 2025 then sent stocks lower again. 

“The stock market is affected both by reality and perception,” said Rick Miller, a financial and investment adviser at Miller Investment Management. “What people believe is happening is often as impactful as what the actual market conditions may be.” 

Though a 10% dip in the stock market can be stressful, it’s also pretty normal. The stock market has always recovered from steeper drops, including most recently the Great Recession and the COVID-19 meltdown. If you’re nervous about your investments, like the state of your 401(k), financial experts say not to panic.

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What should I do if my investments are losing money?

While it can be painful to watch your investments shrink, it’s not always a safer bet to change your strategy, especially if you’re several years away from retirement. If you’re in your 30s to early 50s, time is on your side to ride this out and play the long game. 

However, if you’re on the cusp of retiring or you plan to retire early, Miller said you may want to cash in your qualified plans to preserve what you’ve built over the years. 

Despite the stock market’s historical track record of bouncing back after downturns, retirees (or those approaching retirement) may be unable to afford the time it takes to recover. For example, after the dot-com bubble burst in 2000, the market began to gain steam, but then the 2007-09 financial crisis hit. The stock market didn’t fully recover until 2013.

What’s key is protecting your financial security. For example, as long as you don’t withdraw money from your retirement accounts, selling assets within qualified workplace plans, like 401(k)s or IRAs, won’t result in a tax bill no matter what your age. 

“Cushion the effects a bit by making your qualified plan contributions aggressive until the markets stabilize,” Miller said. It’s a way to benefit from upward momentum in the market while keeping your nest egg safe from any further drops.

Should I be investing more now because stocks are cheaper? 

Given the economy’s broader problems, stocks are likely to bounce around a bit. Most financial advisers recommend against changing your strategy based on the latest stock market ups and downs.

“The best advice for long-term investors is to establish an investment plan and to stick to it,” he said.

It’s generally wise to avoid selling in a panic. By doing so, you could be going against the general guidance for investing, which is to buy low and sell high. 

Financial planners often recommend using what’s called a dollar-cost averaging strategy, where you invest a set amount each month regardless of market conditions. This approach takes some of the emotion out of investing and allows you to lock in low prices during stock market dips, even if you pay more when the market surges.

Still, if you do choose to take advantage of lower prices, just keep in mind that the timing of a recovery is unpredictable. “Even regular investors should consider ‘buying low’ when top quality companies experience price declines not seen for years,” said Miller.