What to Do When the Market Pulls Back (Without Panicking About Tariffs)
- Justin Maxwell
- Mar 28
- 3 min read
Let’s be real: nobody likes seeing their portfolio bleed. I don’t. You don’t.
And with tariffs consuming all news, stocks dipping, and the internet yelling “Sell!” or “Buy my course!”, it’s easy to feel the heat.
But here’s what 20+ years of trading—including losing everything in the dot-com crash—taught me: pullbacks aren’t the end; they’re the setup. You don’t need to panic. You need a plan.
Why I’m Not Going All Cash (And You Shouldn’t Either)
I’ve never dumped everything into cash when the market wobbles. Why? Because timing the bottom is a fool’s game—I’ve tried and failed. Instead, I’ve been trimming winners over the past six months. Not because I’m psychic, but because selling high gives me cash to buy low later. We even took some winners and sold some calls this week on Wednesday as the market had a relief rally!
All of my cash went back into into $SGOV, a short-term Treasury ETF. It earns me 4-5% interest, stays liquid, and sits ready for discounts. It’s like keeping a stash of dry powder while the market figures itself out.
Yes, It Could Drop More—That’s Why I Have Rules
Can the market fall further? Sure. Tariffs could sting. But I don’t guess—I use systems. Moving averages tell me when a stock’s trending up or breaking down. Pyramid levels (adding to winners, not losers) keep my entries disciplined. System beats prediction every time.
When prices break through support, I don’t freak out—I get ready to find my new price levels.
Hedging: Your Secret Weapon
Real estate folks can’t hedge as easily as we can. Here’s how I protect my portfolio without selling the farm:
1. Covered Calls:
Own 100 shares? Sell a call option against them. You cap your upside past a certain price, but you pocket cash upfront. It’s like renting out your stocks for extra income while lowering your risk. Watch my minicourse on youtube
2. Collars:
Buy a put (downside protection) and sell a call (offsets the cost). It’s not free, but it’s cheap insurance. Think of it as a seatbelt for your portfolio.
3. Super Collars (Nerd Alert):
Swap the long put for a put debit spread. You limit protection to, say, a 10-25% drop—because we all know names like Apple/Meta/Google aren't going to zero over tariffs. This cuts costs and keeps you in the game.
These moves shrink your portfolio’s “delta”—how much it swings with the market—without forcing you to cash out or ditch your best stocks.
Zoom Out: Pullbacks Are Normal
The S&P 500 hit all-time highs recently. Guess what? A 10% correction happens almost every year (Schwab’s tracked this since forever). Markets don’t climb forever—they breathe. You don’t avoid drawdowns; you ride them.
What I Don’t Do
- Sell everything and hide.
- Try to nail the exact bottom.
- Buy into panic-driven hype.
And I don’t lose sight of this: we’ll see new highs again. History says so.
Your Pullback Playbook
- Trim Winners: Lock in gains now for ammo later.
- Stash Dry Powder: Park some cash in $SGOV or similar.
- Hedge Smart: Use calls or collars to sleep better.
- Stick to Rules: Let moving averages guide you.
- Stay Calm: Freedom’s the goal, not fear.
Grab This Free Guide
Feeling the market’s weight? I’ve got you. My Hedging Guide for Normal Investors breaks down these strategies in plain English—no fear, no fluff, just smart protection. Get it free here: https://mrmoneymaxwell.gumroad.com/l/kjfqzg
Let’s trade smart, not scared. Join me in the Good Kids Trading discord for real time updates.
Happy Trading Good Kids
-$Maxwell
