What to do if (WHEN) next market crash happens soon in 2026..
Summary
Nolan argues that a major market correction is inevitable following the significant gains of recent years, though the exact timing remains unpredictable. Using Nolan's background in MMA as an analogy, Nolan illustrates that confidence is easy during control, but the real test is sticking to fundamentals when the market turns against the investor. Nolan warns that emotional decisions, such as selling during a 10% or 20% drop, often result in missing the market's best recovery days, which historically occur shortly after the worst declines.
Nolan highlights that since 1928, markets have rewarded patience, with average returns significantly increasing in the one to two years following a correction. Nolan provides a strategic checklist for investors, which includes building an emergency fund of 3 to 12 months of expenses and maintaining a long-term horizon for all invested capital. Nolan specifically advises rebalancing away from heavy technology concentrations into value-oriented assets to prepare for shifting market environments.
Mentioned Stocks
Reasoning: Nolan argues that market corrections are temporary and that the S&P 500 historically recovers to new highs. Nolan states that the best strategy during a crash is to continue dollar-cost averaging and avoid selling, as missing the best recovery days significantly damages long-term returns.
Reasoning: Nolan identifies SCHD as a key fund for diversification away from heavy technology weightings. Nolan argues that maintaining a diversified portfolio through funds like SCHD is essential for long-term success and for surviving market corrections without excessive emotional stress.
Reasoning: Nolan suggests VYM as an alternative for investors who need to rebalance their portfolios to be less dependent on technology stocks. Nolan states that adding non-correlated assets like high-dividend yields is a prudent way to prepare for a potential market downturn.
Reasoning: Nolan recommends moving into value-oriented ETFs like VTV because many investors currently have too much exposure to the technology sector. Nolan states that this diversification helps balance a portfolio when tech valuations become stretched or the market environment shifts.