Stock markets have been in a tailspin in recent days, causing many investors to panic about their portfolios.

The Nasdaq (^IXIC -1.05%) is officially in correction territory after falling more than 11% since mid-July, while the S&P500 (^GSPC -0.77%) And Dow Jones (^DJI -0.60%) have fallen by about 7% and 4% respectively during this time. With prices continuing to fall on a daily basis, it is normal to be concerned about where the market is going.

In times like these, your strategy is crucial. Even seemingly small mistakes can cost you big money during times of volatility, but there is one simple step that can protect your investments: do nothing.

The Power of Nothing

When the market falters and investors panic, it is human nature to something to protect your savings. When the market itself is outside of your control, it can be tempting to try to control factors that are within your control.

Most of the time, however, it is best to wait and see – no matter how much volatility threatens.

Image source: Getty Images.

The market is incredibly unpredictable in the short term, and even experts can’t say how long this downturn will last or how far stock prices will fall. If you sell your investments now and the market immediately rebounds, you’ll miss out on those gains. And if you reinvest after the market rises, you’ll end up paying higher prices for the same stocks you just sold.

Finding the right time to enter the market is essentially a guessing game. And if you guess wrong, it can be expensive. For example, let’s say you decided to sell your stocks on March 9, 2020 – about a week after the market began to collapse due to fears of the COVID-19 pandemic.

At the time, it may have seemed like you had hedged against major losses. The S&P 500 had already fallen more than 18 percent since its downtrend began on February 20, but it would fall much further before reaching its low point in late March.

^SPX data from YCharts

By year’s end, however, the S&P 500 had risen nearly 37% since March. The tech-heavy Nasdaq did even better, gaining more than 62% during that time. By selling your investments, you would likely have missed out on some significant gains.

Of course, no two downturns are the same, so it’s impossible to predict whether the market will follow a similar path now. There’s always the possibility that this downturn will last much longer. But again, if you risk your investments and guess wrong, it could cost you thousands.

A safe approach

Instead of focusing on what the market will do today, tomorrow, or even next week, it is safer to focus on how it will perform in the years and decades to come.

The market has proven to be incredibly resilient, even after being repeatedly battered by the most brutal bear markets, crashes and recessions in history. It has recovered from every single downturn so far, and there is no reason to believe that this winning streak will not continue over time.

^SPX data from YCharts

The best thing you can do now? Leave your money in the market and just wait for the inevitable recovery. If prices continue to fall, your portfolio may lose value in the short term. But if you weather the storm and hold onto your investments, you’ll likely make significant gains once the market recovers.

It’s been a rough few days for many investors, but like all market turbulence, this volatility is temporary. By investing in long-term stocks and staying in the market through good times and bad, you’ll reap the rewards when the market recovers.