Concept
Stay the course
Stay the course is Collins's rule for market falls: a drop, even by half, is the normal weather of the thing you own, not a malfunction, and the investors who lose are the ones who sell in the fall and buy back in the recovery. The response to a crash is to keep the monthly order running and do nothing.
Volatility is the fee you pay for the returns, Housel says, not a fine for doing something wrong. The market has halved many times and recovered every time, and the people hurt were not those who held but those who had to sell, either from panic or because they had no cushion and needed the money. Staying the course therefore has two parts. One is a decision made in advance, while calm, and written down: in a crash, I do nothing, and the order keeps buying. The other is the room for error that makes the decision affordable, several months of expenses in a boring account so that a job loss in the same year as a crash does not force a sale. The rule also covers the quieter failure of tinkering: changing the fund because of a headline, pausing the order because prices feel high. Change the system for reasons from your life, never for reasons from a screen.
A real-life example
Elif in Eskişehir has her monthly order set and her cushion built when the fall of 2023 arrives. It frightens her; the group she muted is loud about it. The order keeps buying at lower prices; she does nothing, because her cushion means she does not have to, and by the time she looks again the fall has become a small footnote on a rising line.
How to use it
- 1Write down now what you will do in a crash: nothing. Keep the note where you will find it.
- 2Build the cushion first so that no emergency can force a sale at the bottom.
- 3Never change the fund or pause the order because of the news; only because of your life.