Global stock markets took a sharp hit recently after U.S. President Donald Trump announced sweeping tariffs on goods imported from the rest of the world. Under the new plan, a 10% blanket tariff will be imposed on all nations, with much higher rates, up to 145% on China alone!
While Trump claims these measures will boost the U.S. economy and protect American jobs, investors worldwide are spooked by the rising risk of a global trade war.
Global stock market crashes are scary. Red screens, plunging portfolios, and sensational headlines often trigger panic – and sleepless nights. But history shows that crashes aren’t just something to fear, they can be opportunities if you know how to navigate them.
So how should we approach investing when global markets tumble?
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First, Don’t Panic Sell
It’s tempting to “cut losses” when you see your portfolio in the red. But selling during a crash often locks in your losses. Alongside the largest single-day market crashes, are also some of the largest single-day gains. You don’t want to realise only the crash, but avoid the recoveries.
Remember one of Warren Buffett’s ageless quote: the market is a voting machine in the short term, but a weighing machine in the long run. Businesses with real profits, strong balance sheets, and good management will likely recover over time. In fact, every major global crash, whether it was the 1997 Asian Financial Crisis, 2008 Global Financial Crisis, or the 2020 COVID-19 crash, eventually paved the way for a recovery.
Instead of panic selling, stay calm. Review your investments. Are the fundamentals of the companies you own still intact? If yes, there’s no need to hit the panic button.
Focus On Quality Assets
During a market crash, almost everything tends to get dragged down, even fundamentally strong companies. But this is where opportunities emerge. Often, high-quality stocks go “on sale” during these periods. Focus on companies with strong cash flow, low debt levels, and dominant market positions. Look for businesses that have a proven track record of consistent profitability, even across different economic cycles.
Platforms like Interactive Brokers (IBKR) allow Malaysians to access some of the biggest and most popular companies in the U.S., European, and Asian stocks with low fees. When uncertainty is high and prices have been battered down, it can be a financially-savvy move to invest in these globally-leading companies.
Start A Dollar-Cost Averaging (DCA) Strategy
Trying to “time the bottom” is notoriously difficult, even professional fund managers get it wrong. Instead of waiting for the perfect moment, consider dollar-cost averaging (DCA).
DCA means you invest a fixed amount regularly (e.g., monthly) regardless of market conditions. When prices are low, you buy more shares; when prices are high, you buy fewer. Over time, this strategy averages out your purchase price.
In Malaysia, you can DCA into unit trusts, robo-advisors like StashAway or Versa, or directly into individual stocks and ETFs via established and trusted brokerage firms like IBKR. IBKR, for instance, allows flexible recurring investments into U.S. ETFs at a fraction of the cost compared to many local platforms.
Keep Cash On The Sidelines
During market crashes, cash is king.
Having some spare cash ready allows you to take advantage of bargains without having to sell existing investments at a loss. This doesn’t mean you need to hoard cash indefinitely, but having a “war chest” equivalent to 10-20% of your portfolio can provide both psychological comfort and investment firepower.
Plus, while you wait to plough your cash into the financial markets at an opportune time, certain short-term cash management tools, like money market funds or fixed deposits, can offer a place to park idle cash while still earning modest returns.
Read Also: StashAway, Versa, KDI: Complete Guide To Cash Management Accounts In Malaysia
Diversify Your Investment Portfolio
Another important lesson from market crashes is simple: never put all your eggs in one basket.
Diversifying your portfolio helps spread your risk and can protect you when certain sectors or regions are hit harder than others. This could mean investing across different sectors like technology, healthcare, financials, and energy, or spreading your investments across regions such as Malaysia, the U.S., Europe, and emerging markets.
It also means holding a mix of asset classes, including stocks, bonds, gold, and REITs.
Again, if you’re using a trusted global platform like IBKR, it becomes even easier to diversify internationally by investing in ETFs that track global indices like the MSCI World Index, S&P 500, or even thematic ETFs covering areas like renewable energy, AI, or healthcare innovation.
By diversifying properly, a slump in one area of your portfolio can be cushioned by strength in another.
Read Also: Malaysian Investors’ Guide To Opening An Account With Interactive Brokers (IBKR)
Think Long-Term
It’s easy to get caught up in the daily noise especially during crashes. But remember why you started investing in the first place: to grow your wealth over years, even decades, rather than days or weeks.
The S&P 500, despite experiencing multiple crashes over the past century, has historically delivered about 7–10% annual returns over the long term (after inflation).
Thus, always align your investments with your long-term goals, whether it’s buying your first home, funding your children’s education, or building your retirement fund.
Market Crashes Are Inevitable – And You’ll Have To Navigate Several In Your Life
Market crashes are not rare events, they’re part and parcel of investing. Throughout your life, you will experience more than one market crash. For example, a middle-aged investor today would have already gone through the GFC in 2008, the pandemic-led crash in 2020, and now the Trump tariff-led crash in 2025.
Instead of fearing market crashes, savvy and experienced investors prepare for them. They see crashes as temporary setbacks, or even as buying opportunities. By staying calm, focusing on quality, diversifying, and using smart tools like IBKR to access global opportunities, Malaysians can turn market turmoil into a wealth-building advantage.
At the end of the day, it’s not about predicting the next crash — it’s about preparing for it.
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