When stocks start falling, people lose their minds…and their money.

Red screens trigger fear and panic in our brains…the urge to “do something.” And for most investors, that something is selling at exactly the wrong time.

For me, Red triggers excitement.

Here’s the truth: market pullbacks are the toll you pay for long-term gains. They’re the price of admission for building real wealth. If you want the upside, you have to learn how to live through the downside.

Over the years, I’ve learned that the biggest difference between investors who build meaningful wealth and those who don’t isn’t intelligence, it’s behavior. Specifically, how they act when markets get ugly.

Instead of trying to predict tops and bottoms, the smartest move is to adopt a simple system that removes emotion from the equation.

The most common system is dollar cost averaging.

Below are three different ways to think about it. In addition to a solid DCA strategy, consider simplifying your portfolio…

Crashes are when great portfolios are built. When the market drops, don’t treat all your holdings the same. Go through your portfolio and ask which companies you truly believe in long term and which ones you’re just “okay” owning. Keep adding to your strongest businesses, the ones with solid fundamentals, strong growth, and clear long-term potential. Consider trimming or selling the positions you don’t feel as confident about. The goal is to put more of your money behind your best ideas instead of spreading it across average ones. Over time, a few great companies will drive most of your returns, so use market dips as a chance to simplify your portfolio and lean into your highest conviction names.

This is your autopilot. You invest a fixed amount on a consistent schedule no matter what the market is doing. Weekly, monthly, quarterly….whatever fits your life and budget.

This works because it builds discipline and keeps you invested through all cycles. You’re buying when prices are high, low, and everywhere in between, which smooths out your average cost over time. You never worry about volatility.

This is where you keep your normal investing schedule but lean in a bit more when markets fall. Maybe you increase contributions when the market drops 10%, then again at 20%. You’re not trying to call the bottom, you’re just buying more when fear is highest and prices are lower. This is where long-term returns can really improve. 

To summarize…

If you’re DCA a $1000 a month, you may increase that contribution to $1500 when the markets are down 10%. 

Then to $2000 when the markets are down 20%. 

Do this evenly across your whole portfolio…stocks, index funds, etc.

This is my favorite. I do a combination of number 1 (quarterly) and this one when necessary.

Conviction Based DCA…not all stocks deserve your capital the same way. The biggest opportunities usually come from a small handful of businesses you truly understand and have highest conviction in…companies with strong moats, sound balance sheets, long runways, rising cash flow and profits, and durable growth.

When those stocks pull back because of market volatility (not because the story is broken), that’s where you lean in.

You add over time knowing you’re holding for years, not months.

Here’s my Conviction DCA Strategy…

From the highs:

➡ I start small on the first 10–20% drop
➡ If it falls another 10–20%, I buy roughly double
➡ Another 10–20% lower, I lean in even more, again increasing the size
➡ And I keep scaling if the opportunity continues

The goal isn’t to call the bottom. It’s to build a meaningful position while prices are getting more attractive.

Not only am I building my position, I’m also steadily lowering my average cost.

I didn’t always do it this way. I used to deploy too much capital on the first drop, which left me with less flexibility if the stock kept falling and made the climb back feel a lot steeper.

Scaling in keeps you disciplined and keeps emotion out of the process.

This isn’t about chasing hype. It’s about building larger positions in businesses you believe will be meaningfully bigger 5 to 10 years from now.

The key to all of this is mindset.

If you see market drops as danger, you’ll panic. If you see them as temporary price adjustments in a long compounding journey, you’ll stay calm and maybe even get a little excited like I do.

But real calm doesn’t come from optimism. It comes from conviction.

And conviction comes from truly understanding the businesses you own: their moat, their growth runway, and why you believe they’ll be meaningfully bigger years from now. When you have that level of clarity, not panicking becomes natural.

The market will always have corrections. Always.

The investors who win aren’t the ones who avoid volatility. They’re the ones who prepare for it and embrace it.

Build your plan before the storm, know what you own, and remember that time in great businesses matters far more than trying to perfectly time entries.

The goal isn’t to feel comfortable.

The goal is to compound.