When did you last encounter genuinely new investment wisdom? I’ve spent nearly three decades writing about investments and personal finance and, sometimes, years pass by without anything fundamentally new to say. Sure, we get novel ideas to discuss—some good, some bad, some outright absurd—but the core principles remain unchanged. Take emu farming or cryptocurrencies. They emerged as new phenomena, but simply reinforced an old principle— avoid investments that generate no real economic value.
There are certain fundamental investment truths worth revisiting when the markets look unstable. These are not new insights, but rather important reinforcements of what we already know. The most crucial factor is your investment timeline. Study any historical period or market you choose, and you’ll notice that while declines are temporary, the market’s upward trajectory is permanent. Recovery typically takes a year or two, sometimes just months. Bear markets only become problematic when you’re forced to withdraw money at a specific time and value, but that’s not how equity investing is meant to work.
Some might point out what seems like an obvious flaw in this thinking: what about stocks that never recover? Consider the infrastructure stocks after the 2008-10 crash. However, the answer is straightforward. It comes down to quality and diversification. Individual stocks can fail permanently, but a careful investor either avoids such risks or limits their exposure so that no single failure can cause serious damage.
If you get these two aspects right—time horizon and quality with diversification— then every market downturn in history has essentially been a buying opportunity. This one is no different. Think back to early 2020. The Sensex dropped from 41,000 to below 30,000, before rising to 47,000 by year-end. It’s easy to say now, ‘Who had the nerve to buy then?’ But remember that every single trade during those months had both a seller and a buyer. The buyers were the market’s shrewdest players, turning panic into profit. As the saying goes, buy when there’s blood in the streets.
The only real challenge with buying during downturns is that investors often try too hard to optimise their entry points. One shouldn’t try to fixate on picking the exact bottom. In 2020, smart investors bought throughout March, April, May, and even into June and July. Perfect timing only exists in hindsight; any entry point is good enough in the real world.What’s truly remarkable is how these market cycles tend to repeat themselves. Yet, we often forget the lessons they teach us. Every time the markets decline, the media narrative shifts to predicting doom and many investors start questioning their strategy. However, try to think if abandoning your investment plan during a market turbulence has ever been the right choice? History suggests the opposite. Those who stick to their well thought-out investment strategy, maintaining regular investments through SIPs or systematic buying, typically emerge stronger from these periods.So the next time you feel anxious about market headlines or hear predictions of impending disasters, remind yourself about these basic truths. You don’t need complex strategies or revolutionary new investment theories. What you need is the temperament to stay the course and the wisdom to see market declines for what they are— temporary setbacks in a journey that has consistently rewarded patient, disciplined investors. You already knew this, but sometimes we need a gentle reminder.
How do you feel about this non-crash now? As I said earlier, you already knew this. Sometimes, we just need a reminder.
The Author is CEO, VALUE RESEARCH
