Your First Market Crash as an XEQT Investor: A Psychological Survival Guide

I remember the exact moment I understood what a market crash felt like, not just as a chart in a textbook, but in my gut.

It was March 2020. I’d been investing for a couple of years, feeling pretty smart about my disciplined approach. Then COVID hit. In a single month, my portfolio dropped over 30%. I watched months of contributions evaporate in days. I opened my brokerage app compulsively, sometimes multiple times an hour, watching the numbers fall.

Everything I’d read about “staying the course” felt hollow. The logical part of my brain knew the math. The emotional part was screaming.

If you haven’t experienced your first real market crash yet, this guide is for you. And if you’re reading this in the middle of one — take a breath. You’re going to be fine. Let me show you why.

1. What a Market Crash Actually Looks Like

Before we talk about surviving one, let’s define what we mean. Markets don’t crash in a straight line — they crash in terrifying bursts followed by false recoveries that lure you into thinking the worst is over, then crash again.

Here’s what major crashes have looked like historically:

A few things to notice:

• Markets always recovered. Every single time. 100% of the time. Over every rolling 15-year period in the history of global stock markets, returns have been positive.
• Recovery times vary wildly. COVID bounced back in months. The dot-com crash took years. You can’t predict which type of crash you’re in while you’re in it.
• The drops are sudden and the recoveries start when you least expect them. Some of the best market days happen right in the middle of the worst periods.

2. Why Your Brain Is Actively Working Against You

Here’s the uncomfortable truth: human beings are neurologically wired to be terrible investors during crashes.

Loss Aversion

Psychologists Daniel Kahneman and Amos Tversky discovered that we feel losses roughly twice as intensely as equivalent gains. A $10,000 portfolio drop hurts approximately twice as much as a $10,000 gain feels good. This means that even in a perfectly balanced market with equal ups and downs, you’d feel like you’re losing — because the downs register more strongly.

During a crash, this asymmetry goes into overdrive. Every red day feels catastrophic. The pain becomes cumulative.

Recency Bias

Your brain gives disproportionate weight to recent events. After three weeks of declining markets, you genuinely start to believe the decline will continue forever. You can’t emotionally access the knowledge that markets have always recovered because every data point you’re currently receiving says “down.”

Herd Mentality

When everyone around you is panicking — friends, family, Reddit, your coworkers — it takes enormous psychological fortitude to do the opposite. Humans survived by running when the group ran. But in investing, running with the herd (panic selling) is the single most destructive thing you can do.

The Certainty Trap

During a crash, selling feels like taking control. You’re “doing something.” The pain stops. Your portfolio stops going down because you’ve locked in your losses. There’s a perverse sense of relief.

Staying invested feels like doing nothing, which feels irresponsible. But doing nothing is exactly the right move.

3. The Math That Should Keep You Invested

Let me show you some numbers that might help anchor you during the next crash.

Missing the Best Days Is Catastrophic

This is the single most important statistic in investing:

If you invested $10,000 in the S&P 500 from 2003 to 2023:

• Staying fully invested: $64,844
• Missing the 10 best days: $29,708
• Missing the 20 best days: $17,826
• Missing the 30 best days: $11,546

Read those numbers again. Missing just the 10 best trading days out of roughly 5,000 cut your returns by more than half.

Here’s the kicker: the best days almost always happen during or immediately after the worst periods. If you sell during a crash and wait until things “feel safe” to get back in, you will almost certainly miss the recovery.

Dollar-Cost Averaging During Crashes Is Your Superpower

If you’re regularly investing in XEQT through automatic contributions, a market crash is actually good news for your long-term returns. Yes, really.

When XEQT drops from $28 to $20, your regular $500 contribution buys 25 units instead of 17.8 units. You’re accumulating more shares at lower prices. When the market eventually recovers (and it will), those extra units purchased at bargain prices will be worth significantly more.

The investors who built the most wealth over the past decade aren’t the ones who timed the market. They’re the ones who kept buying through 2020 and 2022 while everyone else panicked.

Your Time Horizon Is Your Shield

If you’re investing in XEQT, you likely have a time horizon of 10+ years. Here’s what that means in practical terms:

• Over any 1-year period, global stock markets have been positive roughly 73% of the time.
• Over any 10-year period, they’ve been positive roughly 94% of the time.
• Over any 20-year period, they’ve been positive essentially 100% of the time.

A 30% drop matters a lot if you need the money tomorrow. It’s a blip on the radar if you’re investing for retirement in 25 years. The crash that feels like the end of the world right now will be an almost imperceptible dip on your portfolio’s long-term chart.

4. A Step-by-Step Crash Survival Protocol

When the next crash hits (and it will — crashes are a normal, expected part of investing), follow this protocol:

Step 1: Acknowledge the Feeling

Don’t pretend you’re not scared. Don’t try to suppress the anxiety. You’re watching your hard-earned money decline in value — of course that’s stressful. Acknowledge it. Name it. “I’m feeling anxious because my portfolio is down.”

Trying to be stoic or pretending you don’t care is counterproductive. The investors who blow up their portfolios during crashes aren’t the ones who feel fear — they’re the ones who act on it.

Step 2: Delete Your Brokerage App (Temporarily)

I’m not kidding. During the COVID crash, the single best thing I did was remove the Wealthsimple app from my phone for two weeks. My automatic contributions kept going. I just stopped checking.

You can’t panic sell if you don’t see the numbers. Out of sight, out of mind. Your automatic investments will continue buying at bargain prices while you go about your life.

Step 3: Revisit Your Time Horizon

Pull out a piece of paper and write down when you actually need this money. If the answer is more than 5 years from now, you have nothing to worry about. Draw a timeline. Put today on one end and your goal date on the other. Look at how much runway you have.

Step 4: Read About Past Crashes

Go look at a long-term chart of the global stock market. Find the 2008 crash — the one that felt like the end of capitalism. See how it looks now? It’s a dip. A scary dip that made newspaper headlines and caused real suffering, but on a 20-year chart, it’s barely noticeable.

Step 5: Keep Buying

This is the hardest step and the most important one. Keep your automatic contributions running. If you have extra cash, consider investing more during the crash (only money you won’t need for 10+ years, of course).

Warren Buffett’s famous line applies: “Be fearful when others are greedy, and greedy when others are fearful.” During a crash, fear is everywhere. That’s your signal.

Step 6: Talk to Someone Who’s Been Through It

Find a friend, family member, or online community of long-term investors who’ve survived previous crashes. Hearing “I went through 2008 and I’m fine” from a real person is more powerful than any chart or statistic.

5. What NOT to Do During a Crash

Knowing what to avoid is just as important as knowing what to do:

Don’t Sell

This is the cardinal sin. Selling during a crash permanently converts a temporary paper loss into a real, permanent loss. The only scenario where selling makes sense is if your fundamental financial situation has changed (you’ve lost your job and need the money to survive, for example).

Don’t Try to Time the Bottom

“I’ll sell now and buy back when it’s lower.” This strategy requires you to be right twice: once when you sell and once when you buy back. Getting the timing right even once is nearly impossible. Getting it right twice is essentially gambling.

Don’t Change Your Strategy

A crash is the worst possible time to make strategic decisions. Your emotional state is compromised. Deciding to switch from XEQT to individual stocks, or from equities to cash, during a crash is like making major life decisions while sleep-deprived. Wait until markets are calm and boring before reviewing your strategy.

Don’t Check Financial News

During a crash, financial media goes into panic mode because fear generates clicks. Headlines are designed to make you feel like this time is different, like this crash will never end. Turn it off. Unsubscribe from the newsletters. Mute the Reddit threads.

Don’t Compare Yourself to Others

Someone on Reddit will claim they sold at the top and bought back at the bottom. They’re probably lying, and even if they’re not, they got lucky. You can’t build a retirement on luck.

6. Reframing: Why Crashes Are Actually Good for Young Investors

This might sound counterintuitive, but if you’re in the accumulation phase (buying more XEQT than you’re selling), crashes are mathematically beneficial to your long-term wealth.

Think about it this way: if you’re going to be buying groceries for the next 30 years, would you prefer food prices to go up or down during that time? Obviously down. Stocks are the same. If you’re going to be buying XEQT for the next 20 years, lower prices in the early years mean you accumulate more units, which are worth more when prices eventually rise.

The worst-case scenario for a young investor isn’t a crash — it’s markets going straight up with no dips, because you’d be buying at higher and higher prices the entire time.

The only people who should genuinely worry about crashes are those who are about to start selling (retirees drawing down their portfolio). If that’s not you, a crash is a gift wrapped in anxiety.

7. Building Crash Resilience Before It Happens

The best time to prepare for a crash is when markets are calm. Here’s how:

Keep an Emergency Fund

Having 3-6 months of expenses in a high-interest savings account means you’ll never be forced to sell XEQT during a crash because you need money for rent or groceries. Your emergency fund is what allows you to stay invested through the storm.

Invest Only Money You Won’t Need for 10+ Years

If you might need the money in 2-3 years, it shouldn’t be in XEQT. It should be in a HISA or GIC. You can’t stay the course during a crash if you need the money next year for a down payment.

Automate Everything

The fewer decisions you need to make during a crash, the better. Set up automatic deposits and auto-invest. When the crash hits, the system keeps running whether you’re emotionally capable of clicking “buy” or not.

Write a Letter to Your Future Self

This sounds silly, but it works. Right now, while you’re calm and rational, write a letter to yourself that says something like: “Hey future me, the market is down and you’re scared. That’s normal. Here’s why you shouldn’t sell…” Include the statistics from this article. Tape it to your bathroom mirror during the next crash.

Know Your Risk Tolerance Honestly

If a 30% drop would genuinely cause you to sell, then you might have too much in equities. Consider a balanced fund like XBAL (60/40 equities/bonds) instead of XEQT (100% equities). There’s no shame in choosing a less volatile allocation. The best portfolio is the one you can actually stick with.

8. The Historical Evidence: It Always Gets Better

Let me leave you with this perspective. Since 1970, global stock markets have experienced:

• 8 bear markets (drops of 20%+)
• Multiple recessions
• Oil crises, wars, pandemics, financial system near-collapses
• Countless predictions of permanent decline

Through all of that, a globally diversified portfolio has returned roughly 8-10% annually. Every dollar invested in 1970 would be worth well over $100 today, adjusted for inflation.

XEQT gives you that same global diversification. The next crash will come, and it will feel terrible, and it will end — just like every crash before it.

The Bottom Line

Your first market crash is a rite of passage. It’s where you discover whether you’re actually the long-term investor you thought you were. The good news is that you have the information, the tools, and the strategy to get through it.

The investors who come out of crashes wealthier than they went in are the ones who:

• Kept their automatic investments running
• Didn’t sell
• Maybe even bought a little extra
• Turned off the noise and waited

That’s it. No secret strategy. No complex hedging. Just discipline and patience.

And the best way to make all of this easier? Automate your investing so the system works even when your emotions don’t.

Just Buy XEQT is for educational purposes only and is not financial advice. Always do your own research before making investment decisions.