What to do if (WHEN) stock market corrects big in 2026

It's a matter of time before the next big crash. Now I don't know when it is, nobody else does either, but what I do know is that it does feel like it's coming soon. One of my favorite quotes is, everyone has a plan until they get hit in the mouth. As a Muay Thai fighter for years and now as a student of Jiu Jitsu, this couldn't be more true. But for those of you that have not yet gone through a real market crash, I'd say one of those feels more like a kidney punch than just a punch to the face. In MMA or boxing, when you get hit in the kidney, it doesn't just hurt in the moment, it hurts for days and weeks after the fact. So this video is gonna give you real data of what to do in the event of an actual real crash and hopefully spur you to build out your plan today so that you can be proactive rather than reactive. I'll give you the only three scenarios that you can do in the event of a crash so you can be very ready. My name is Nolan Govea, my students call me Professor G and I made this channel to make investing simplified. Remember that all investing carries risks so do your own research. This is not financial advice and I'm not a financial advisor. So early last year in 2025, many people started to get worried because we had a new president start his term and that president has some polarized views. We knew that we'd be in for an interesting year but we didn't know exactly how interesting and very quickly we found out. When he announced the tariffs in February and then doubled down hard in March and very much in April, we can literally see what this did to emotional investors and institutions by just looking at the chart of what happened in the S&P 500 last year. February started the skid and it accelerated through April. The problem was that many people started selling just because what if. Thinking that these tariffs were the end of the world and what was gonna happen was everything was gonna shut down or the rest of the world was gonna ban against us or this was just gonna increase prices so bad that all margins were gonna decrease and profit was gonna go away and the whole United States market was just gonna drop like crazy. I remember having conversations with people very high up in the finance world and they were saying that this one is totally different, we've never had anything like it and there's a possibility that we don't even have a stock market come 2026. All right, take it easy turbo, don't get too carried away. People started selling and then more and more news kept coming that the rest of the world was going to increase their tariffs on us, making many even more nervous. Then more selling happened. Then when people saw massive sell-offs and declines of 10 to 15%, that caused even more sell-offs and now people were selling only because others were selling. So many people lost so much money, not because they sold probably in a loss right then, but even worse, if you look at the rest of the year, this market just accelerated right back up. So for anyone who sold in like April and then held their money out waiting for even more of a dip, they lost out on 25% or more of gains had they bought in at the bottom and overall had they just done nothing all year, they would have gained around 18% just staying put. So here's some more actual historical figures with data from actual long-term research. After 10% corrections or pullbacks, the average three-month return is a positive 2.8%. The average six-month return is a positive 5.4%. The average one-year returns positive 5.2%. The average two return is plus 14%. And this is average returns going back to 1928. For deep declines of over 15% or greater, the average 12-month return post-decline is about 47% historically. Now these figures don't guarantee future returns, but it's just showing you actual historical data dating back all the way to the Great Depression time. And even deeper than that, here's what happens after specific dips, specifically looking at typical declines and recoveries. So corrections, anywhere between a 10% to 20% decline are common and usually recover within a few months. Bear markets, which are above a 20% decline, take much longer, historically around 19 months to bottom, and recovery can take years. However, in many cases, the market does eventually recover and reach new highs. During the 2007 to 2009 financial crisis, the S&P 500 fell around 55%, but later posted dramatic gains, like 70% in the year following the March 2009. After the COVID-19 crash in March 2020, the S&P 500 fell about 30% over weeks, but rebounded to new highs within months. And we've seen even faster downturns and then even faster recoveries in the past couple of years. More specifically, the one that just happened last year had everybody going crazy, and within a couple of months, everything was back to normal and soaring to new all-time highs, almost so much that when you really think about what happened in that March-April time, it's almost funny. Downturns are definitely painful in the moment, and I remember that. In March and April, people were freaking out, and it was a bit scary. But they rarely last for very long, and if you're invested in the right things, they come right back up every single time. So the most important thing that you need to do is be able to plan out exactly what would you do if there was a bigger dip than normal, right? It's pretty easy to say that if there's a dip, I'll just buy the dip. But what if that dip lasts two or three years? And what if that means that it's going to cause job loss and there's going to be market slowdown and economic slowdown, and all the while, you're just trying to have your basic needs met? Well, there's three different scenarios that you should understand, and I'm going to highlight each one so that you can figure out what's best for you. But first, let me thank and introduce the sponsor of this video, Outskill, which is the first-ever AI-focused educational platform to accelerate AI learning. They're hosting the two-day AI Mastermind Training, live this Saturday and Sunday, 10 a.m. to 7 p.m. Eastern on both days, and right now is the perfect moment to join because you can get in absolutely free as part of their New Year Upskilling Fest. This 16-hour AI training has already built 10 million-plus AI-first professionals worldwide and is rated 4.9 out of 5 on Trustpilot. People from marketing, finance, operations, product, and engineering all join because this isn't industry-specific. It's literally for everyone. This is where you learn how to build AI agents, automate workflows, connect tools like Sheets, Notion, CRMs, and email to create profitable systems. 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If it's a bad stock, bad company, you probably shouldn't be in it anyway and it's quite speculative, it could go down and it could stay down. It doesn't mean it's coming back up. So selling out of that may actually be a smart move. What we're talking about though is investing in something broad-based that has much history, that has solid data, that's been around forever. And so anything that I'm talking about here in this section, it has to do with ETFs, specifically just think the S&P 500. So anyway, if there's a huge crash and you sell because it's scary, that's going to be a panic sell because a market drop only becomes a loss, you only lock in the loss if you sell. If it drops and you don't do anything or you don't sell it or whatever, yes, on paper, your value has gone down but as soon as it comes up within a couple months, maybe a couple of years if it's a bad one, then we're right back to the value that you had. You don't lose the shares, so you only lose if you sell. And some people might say, well, I'm just gonna sell now because if it drops further, then at least I saved myself from those losses. Which yes, that's true but then I always ask them, okay, but then when do you buy in? And their answer is always, well, I'll just buy in when it hits the bottom. How do you know that it's the bottom? That's the whole point. Most people that sell, they actually lose out the most because it comes back up and they're saying, well, I think it's gonna come back up and well, it's probably gonna drop a little bit more and then when it drops more, then I'll buy. But really what happens is it just steadily starts increasing and then they just say, well, I still wanna be invested in the S&P 500, I know I should be forever, so I'll just buy in now. So now they've sold at a low, they're buying at much higher so they really lost out on a couple of different ways. So the number two scenario, if the whole market were to crash, what you could do there is nothing. So basically you just hold through the dip, you let the market do what it's gonna do and you weather the storm. I remember when I was in my MBA and one of my high level finance classes, I remember a story that I'll never forget and it was a study on who is the best investors over a period of time. I forget if it was a 30 year, 40 year study, something like that. And literally the best investors, the ones that did the absolute best, were one of two things. Number one, they either forgot that they had that account and so they literally held through dips and things because they just didn't even remember that they had it, so they just held and let it go. Or number two, that person was dead. So literally they had to hold it and they couldn't touch their accounts. Either way, the person didn't touch the accounts and those were the investors that did the best through any market periods. Historically markets recover and go on to new all-time highs even after severe downturns like 2008 and 2020, meaning holding through often restores value. Data shows that missing just a few of the best market days can drastically reduce long-term returns and the best rebound days often come near or just after the worst downturns. All right, so number one, you could either panic sell. Number two, you could just hold. Number three is my favorite and it's tough to do, but if you have a plan, this is where you get very rich. And number three is just to buy the dip. The outcome here is that they're potentially higher returns, but it's definitely not guaranteed. After big declines, the average one-year return of the S&P 500 following a 20% drawdown has been higher than usual, like closer to 10% versus under 7% long-term. Now just so you know, it doesn't just mean that if you buy the dip, you're gonna be good, right? For those of you that have actually done this before, let's just say in April, this actually happened. I actually did this. So in February, the tariffs were announced and things started to drop. Then in March, they dropped harder. And when that second drop happened, I bought because at that point it was down, I forget, 12%, something of that nature. I thought this is a great time to throw a good amount of money in. Well, the problem was that it kept escalating and so it dropped even further, down 20% or so. And so yes, my buy the dip then dipped further, so I saw my money lose for a second. What I did was I just bought more at that point. And yes, I understand that had the tariff conversation keep going or things escalated geopolitically, that dip could have even turned into a further dip. That absolutely can happen. But what I'm saying is I had a plan. I knew that if something drops about 10%, I'm good to throw a little bit more than my normal dollar cost average into it. If it drops more than 15%, I'm probably putting most of any of my reserves into the market. I've seen the data, I've seen the studies, we rarely see a 15% and definitely rarely see a 20% drop. So the odds are in my favor. I knew that I could throw the money in and even if it took a year or two or three of a crazy slowdown recession, I would have been okay. Now you have to assess your position because if you're retired or if you need the money next year or next month, it's not necessarily the best idea for you to be playing those odds. It'd be much better for you to set yourself up for safety. So I understand a good amount of people that watch my videos are actually in retirement and trying to keep yourself safe. And so I'm not talking to you. You're probably not buying the dip. You're probably setting yourself up for being able to do number two, which is just to hold through the dip. And the best way to actually set yourself up to do that is to do what I say in a lot of my videos, which is have about three years worth of living expenses off to the side. The average recession is anywhere between a year and a year and a half. And then really bad ones are closer to about three years. And so if you can be optimally safe with cash of three years off to the side and we have a terrible recession for three years, you can let your investments just stay and hold and do the best thing possible other than buying the dip and you can live off of the cash that's off to the side and that right there is a perfect plan for you. So let me sum up the three options here and give you my final thoughts. If you sell on the dip, that often realizes losses and can miss strong rebounds. Historically, this is a poor decision for long-term returns. If you just hold, this captures much of the subsequent rebound on average, especially if you stick with it through recovery. And if you buy the dip, buying after a dip can boost returns over long-term periods, but timing matters and sometimes dips can deepen before recovering. Market downturns just happen. For those of you that have been invested in the market for a long period of time, 20 years or more, you know that this is just a thing. And so we can't just sit here and say, oh, I hope it never happens because it's going to happen and it's probably going to happen this year. So you need to build out your plan and I would suggest that you build out the plan today. Have an idea of what you're gonna do if you do see a dip and be proactive on it. Remember that last year, because I had a plan and that's why I beat just sitting in the regular S&P 500 for the entire year last year. Had you just sat in the S&P 500 from the beginning of 2025 to the end of 2025, you would have earned around 18% or so. But because I bought so heavy in the dip, especially in March and April, my returns were about three times as much as that last year throughout my entire portfolio. And what am I investing in most this year? Click this video here that I just did where I go over my updated 3Fund portfolio and it's a very simple investing, added a new ETF in there and give you all the percentages based off of your age and exactly how to do this. You can absolutely do this yourself and remember to keep investing simplified.