How to Turn a Market Dip Into a Long-Term Win

FULL EPISODE AND SHOW NOTES: www.sunnybranchwealth.com/blog/2026-q1-recap

If you’re a young inheritor, you might wonder what you’re supposed to do when the market is down. 

Your parents are freaking out - is it a bad thing that you don’t really care? 

Spoiler: absolutely not. 

In this episode, I explain why a market downturn can be a HUGE opportunity for younger inheritors, and how you can position yourself to take advantage of the dip. 

If you’ve ever wondered about:

• Tax loss harvesting 
• Roth conversions 
• Investing more when the market is down

This is the episode for you. 

Read on for the advice you need to take advantage of the next stock market correction that comes your way. 

Sunnybranch Wealth LLC (“Sunnybranch Wealth”) is a registered investment advisor offering advisory services in the State of Oregon, the State of California, the State of Washington, and in other jurisdictions where exempt. Registration does not imply a certain level of skill or training.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site. 

Transcript

What Is Heir Necessities and Who Is It For?

Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors. Each episode of this podcast, I break down a different topic related to generational wealth and inheritance.

My goal is that you can stop trying to figure out how to manage your money by asking Google or ChatGPT what to do and come here instead for real talk, real solutions and real advice that you can start implementing in your life today.

What Happened in the Stock Market in Q1 2026?

On this week's episode of Heir Necessities, I'm taking a look back at what happened in the first quarter of 2026. The headline news is that at the end of the quarter on March 30th, the market was down almost 7.5%, which begs the question, how do you take advantage of that?

When markets are down and you are young and rich, what should you be doing on the investment front to set yourself up for when that rebound happens?

Before I dive into it, just a quick note that if you have been enjoying the Heir Necessities podcast, I would be so appreciative if you could take two seconds and leave us a five-star review wherever you listen to podcasts, or if you don't listen on Apple Podcasts, on Apple Podcasts. It is hugely helpful for the show and it helps me connect with and support more inheritors just like you.

How Volatile Will the Stock Market Be in 2026?

Now, let's dive into what you should be doing on the investment front when the markets are way down. I know that markets have rebounded, at least by the time that I'm filming this. Who knows what's going to happen by the time you're listening to it?

But the point stands that we are in a period of increased market volatility, and there is a higher likelihood than at any point over the past few years that we're going to see some significant dips in the market in 2026, and you need to be prepared.

Why Should You Never Panic Sell When the Stock Market Is Down?

Before I tell you what you should do when the markets are down, I want to give a quick note of what you should never ever do. If you take one piece of advice away from all of the Heir Necessities episodes that you listen to, it should be this. Do not sell out when the markets are down.

Panic selling is one of the worst things that you can do if your goal is to make money in the stock market over time. And the reason is that some of the best days of performance in the stock market, days when the market is up 10, 20%, come immediately after some of those really low troughs.

So if you sell out at the bottom, you miss that bounce back, and then the question becomes, when are you going to get back into the market? Because if you see a bounce off the bottom, it's going up and up and up.

Why Doesn't Market Timing Work for Individual Investors?

Well, you don't want to buy back in when it's going up because then you've lost money, right? You sold 300 shares of Google, but now the shares are more expensive, so you can't buy back 300 shares for the same price. So you're just going to wait until the market goes down again.

Well, it's not a guarantee that it does. It's not a guarantee that it gets back down to that low point where you sold out.

And even if it does, are you really going to be comfortable buying in at that low point? Are you psychologically going to want to wait until it's even lower? And then at that point, you've missed it again.

The point of all of that being market timing does not work. There are people that are way smarter than me or probably anyone who listens to this podcast who have insane algorithms and they can't even consistently time the market to make money. So if you think that you panic selling at home is going to do it, please take a second, take a breath, log out of your brokerage account, and go take a walk.

How Should You Prepare Your Investment Portfolio for a Market Downturn?

The next, before I give you advice about what you should be doing when the markets are down, the next thing I want to tell you is how to prepare for it. You know what you should not do when the markets are down. Well, how should you be getting yourself ready so that you can avoid that panic sell when we see a 7, 10, 20, 30, 50% drop in the markets?

I want to tell you what I've been doing for all of my clients at Sunnybranch. Starting in the fall last year, I started talking to all of my clients who have active cash needs from their portfolios, clients who are either retired or who supplement their income with consistent portfolio withdrawals. It also includes clients who are thinking about buying a house in the next year or two, anyone who has a need for cash.

Why Should You Keep a Year of Cash in a Cash Management Account?

And what we were talking about is that the markets are up, but we are expecting to see increased volatility. And when that happens, the most important thing to do to protect your portfolio is to have at least a year of cash in a cash management account. And usually that's an account that's invested either in a high-yield savings account or a money market fund.

If your state has an income tax, in a treasury market fund so that it's state tax free, which is a huge benefit. But money that is out of the market as a whole and is in a safe place will be stable for you so that when you need cash, you know it's there. And then when whatever happens to your portfolio happens, you are protected.

Yes, your portfolio's down, but you have the cash that you need to live for the next year or two. And in that year or two, it gives me flexibility to generate more cash from your portfolio in a way that's efficient and in a way that avoids me having to sell out of a bunch of stock at the bottom of the market because you need cash and the day you need cash happens to be the day the market is also down 30%.

What Are the Three Best Investment Strategies When the Stock Market Is Down?

You know how to prepare for a market downturn. You know what you should absolutely never do when the market is taking a dive.

Now, what are the three things that you should be doing? What are the three proactive opportunities that you should be looking at when markets are down?

What Is Tax Loss Harvesting and How Does It Work?

The first option is tax loss harvesting. Some of you might already know what this is, but I have a lot of people who I work with at Sunnybranch who have never had the basics of capital gains explained to them. So I'm going to take a little bit of a deep dive into it here.

Capital gain is the difference between the price you bought an asset for and the price that you sold it for. So if I bought a share of Microsoft stock for a dollar 40 years ago, and today that same share of Microsoft stock is worth $500, I have what is called an unrealized long-term capital gain of $499.

The difference between the price I bought the share for and what the share is worth now. If I sold that share of Microsoft stock, I would have realized $499 of capital gains and then I would owe taxes on that capital gain.

How Do You Use Capital Losses to Offset Capital Gains on Your Tax Return?

Tax loss harvesting gives us the opportunity to net paper losses without actually losing anything in reality. Here's how it works. Say instead of buying my share of Microsoft stock 40 years ago, I bought it last month and it was trading at $500.

I now own my share of Microsoft, it's worth $500, I'm feeling good. All of a sudden, Microsoft stock is down.

Now my share of Microsoft, which was worth $500, is only worth $250. So I have now an unrealized short-term capital loss of $250.

So if I sell that share of Microsoft, I net on paper a $250 capital loss that I can use to offset any capital gains this year or at any point in the future because that loss will carry forward on your tax return.

Can You Sell a Stock at a Loss and Still Stay Invested in the Market?

I know what you're thinking now is, Katherine, you told me you should never sell out at the bottom of the market. And I'm telling you that that is true.

So what you can do then is you can buy a substantially similar security. This works a little bit better with funds as opposed to stock. But say, okay, I'm going to sell Microsoft, I'm going to net that $250 capital loss and I'm going to buy a share of Apple to replace it. And Microsoft and Apple move close enough in conjunction that if Microsoft goes way up, I'll still have my Apple.

What Is a Wash Sale and How Do You Avoid It?

What's important to note here is that you cannot sell that share of Microsoft and then buy it back the same day, or actually within 30 days of when you sold it. You have to wait until that 31st day.

If you sell a stock for a loss and then buy it back within a 30-day window, it's called a wash sale, and the IRS will actually disallow that $250 loss.

This is a way oversimplified example, but the point is that when the market is down, the first thing that you should be looking for is opportunities to harvest losses and bank those losses to offset future gains. If this is something your advisor is not doing, then you need to be working with an advisor who is more proactive and more focused on looking for these opportunities to benefit you on the tax side.

Should Young Inheritors Invest More Aggressively When the Market Is Down?

The next thing that you should be doing when markets are down is getting more aggressive. At Sunnybranch, I work primarily with younger inheritors, people who have a lot of money and a very long runway.

And if that's true, if that resonates with who you are, you should be looking at down markets as an opportunity to push as much money as you can into your stock portfolio. Because when you buy when things are down, you have more room to grow, more money in the market to make money, right?

What is the basic tenet of investing? Buy low, sell high. Or if you're an inheritor who wants to build generational wealth, buy low, hold on to it forever, and give your kids millions or tens of millions of dollars, if that's what you're working towards.

How Can Inheritors Use a Down Market to Build Long-Term Wealth?

And so whereas it can be scarier for a retiree, someone who's living on a fixed income from their portfolio and really depends on that portfolio for the market to be down 50%, if you're an inheritor, you should be looking at this as an opportunity. Do you have cash on the sidelines that you could push into the portfolio?

Could you make your portfolio a little bit more aggressive and pull some money from the bond side into the stock side to rebalance in the future, kind of as the market grows? But understanding that if you have a 20, 30, 40, 50-plus year time horizon, a down market is one of the best things that you can have.

And the further down it goes, honestly, the better it goes for you. Again, speaking in a historical context, the market has always gone back up after it goes down. It's not a guarantee of what's going to happen in the future, but historically, that's what we've seen.

Should You Move Money from Bonds to Stocks During a Market Downturn?

Long story short, if the market is down and you have cash to invest, that's the time to do it. And even if you don't have cash to invest, if you're not actively withdrawing money from your portfolio, it might be time to start pushing money over from the bond side into the stock side to get a little bit more juice in your portfolio and kind of buoy your potential returns over the next couple of market cycles.

Are Roth Conversions and Inherited IRA Distributions Better in a Down Market?

The last opportunity that you should consider when investing in a down market is looking at Roth conversions and inherited IRA conversions. These are really going to depend on your overall income, so this is more applicable for inheritors who are maybe in a pre-retirement period or who expect to have a period of lower income years for whatever reason.

But if you are in the middle of a Roth conversion strategy or if you're thinking about putting a Roth conversion strategy in place with a large pre-tax IRA, a down market gives you the opportunity to get more money out of that Roth IRA and do the transfer when the relative value of that account is less. So you can do more and get more of that tax advantage when the market's down. This is also true of taking inherited IRA distributions.

How Do You Time Inherited IRA Withdrawals During Market Volatility?

It's really hard to time them, especially if it was like what we saw at the end of March where you have this strong dip, seven and a half percent down, and then we kind of bounced right back up on the 31st and moving into April. But if you have an inherited IRA that's worth millions of dollars and you have a 10-year withdrawal plan in place for that inherited IRA, the best time to take that withdrawal is probably, if you can time it, when the market is down.

Because that way you're pulling proportionally more out of that IRA. If you have an IRA that's worth $2 million and then the market's down 50%, now your IRA is only worth a million. So if you pull out 200,000, you've taken the same withdrawal, you're paying the same amount of taxes, but you've pulled out 20% of that account instead of only pulling out 10%.

It's not the hugest deal if you can't time it and it works better really when there's a sustained period. It's going to be something that's again difficult to do when markets are down if they bounce right back, but it's something good to keep in mind.

What Should Inheritors Do When the Stock Market Drops 10%, 20%, or 30%?

What I hope you've learned from this episode is that you should not be scared of down markets as a current or future inheritor. You should look at them as an opportunity and you should see what proactive steps can be taken to actually benefit you and your future financial position when the markets are down 10, 20, 30%.

If you're working with an advisor who isn't bringing you these proactive opportunities, it might be time to get some different help. If you're interested in learning more about how Sunnybranch helps clients take advantage of these opportunities, shoot me an email, katherine@sunnybranchwealth.com, or send me a DM on Instagram at @sunnybranchwealth.

If you're not ready to reach out yet, then I'll look forward to keeping the conversation going and I'll catch you on next week's episode of Heir Necessities.