With the swings of the market this year having people go from euphoria to depression, it is likely that investors are itching to change their investments or strategies responsively, and perhaps they’ve already done so. But more action doesn’t always mean more returns.

How should investors react to market declines? Should they prevent losses by selling or buy more stocks at a favourable discount? Even then, when is the best time to do so?

You’ve done everything right: You’ve set a long investment horizon to ensure positive returns, and reduced your equity allocation to make room for bonds to absorb shocks in the market. So what should one do when the invested assets suddenly don’t seem to behave anymore?