Here’s What Suze Orman Thinks You Should Do When Market Volatility Strikes

• Suze Orman advises investors to stay diversified and consistent during market volatility rather than sell out of panic.

• A 3-4% decline in the S&P 500 represents a slight decline that does not warrant panic.

• Dollar cost averaging removes timing pressures and keeps investors buying during market declines.

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Suze Orman, one of the most respected people in personal finance, is right when she encourages investors not to let panic take over when market volatility starts kicking things up a notch. There is no doubt that many investors are quick to panic at the first signs of pain in the stock market.

If you’re already in a state of panic or somewhat stressed after a 3% drop in the S&P 500, you may have overinvested in high-risk securities, or perhaps you’re listening to too many apocalyptic bear predictions that have been popping up in recent weeks.

Of course, a 3-4% decline in the broad market is nothing to panic about. But if you think about what could happen and the bearish thesis of some people involved in the “AI bubble” bursting scenario, then such a small drop (which is just a blip in the broader scheme of things, at least so far) might make you nervous enough to sell a few of your holdings, including those that might hold decent value at current prices.

However, I believe that calming your emotions and managing environments where the markets are experiencing a bad losing streak, is the key to achieving good performance over time in the markets. Suze Orman takes things a step further by urging investors to remain diversified and consistent despite the ups and downs of the markets. When volatility hits, they also look to patience and discipline as assets. It is undoubtedly easy to panic sell at a time like this.

You’re probably already convinced that we’re living in an AI bubble, given the number of times you’ve heard the term over the past couple of months. The more convinced you are, as is the case with many bears, the riskier it may be to continue investing in reliable stocks you’ve held amid the markets’ three-year uptrend.

Of course, there are also strong arguments in favor of not having an AI bubble, but when stocks decline, the arguments in favor seem much louder. But it is important to keep things under control and look at the bigger picture. Orman believes a long-term mindset is key for investors, especially those who may have been afraid to exit the markets at the first signs of volatility.

While a 3-5% drop (or 6-7% for the Nasdaq 100) may be the start of a correction, getting the timing right is very difficult, even if you are a professional trader who does this for a living. Instead of timing the recent slide, which is still very moderate, by the way, especially when you consider the significant progress we’ve seen since release day, implementing a dollar-cost averaging approach could be a smart idea to take the timing completely out of the equation. If markets decline, you will feel like holding off, but a dollar-cost averaging strategy will encourage you to continue putting a fixed amount of cash into stocks at lower prices.

So, as volatility and fear return to Wall Street, following Suze Orman’s playbook could be helpful. Instead of listening to the featured bears of the day on your favorite financial TV show, you might be playing the long game, continuing to buy steadily over time. Staying calm is the key to success during turbulent times like these.

Personally, I think Orman’s approach beats hitting the panic and sell button because you’ve heard someone say we’re in an AI bubble that’s going to burst several times. Believe it or not, such a negative comment can get to you and can push you away from the right investment path.

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