Market jitters? Take a deep breath

I think I'll wear my therapist hat today, so here goes. Are you worried about what appears to be a stock market crash? Let me put your mind at ease - there isn't one. Really, I'm not joking here. Look at any meaningful timeframe - two years, three years, or longer - and you'll see equities delivering healthy returns. The current situation is merely a normal pause, which might extend longer than usual, but there's nothing extraordinary about it.

Here's a thought: 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 without anything fundamentally new to say. Sure, we get novel things to discuss - some good, some bad, some outright absurd - but the core principles remain unchanged. Take emu farming or cryptocurrencies, for instance. They emerged as new phenomena but simply reinforced an old principle: avoid investments that generate no real economic value.

Suggested read: The endless crypto hype

There are certain fundamental investment truths worth revisiting when markets look unstable. They're 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 those infrastructure stocks after the 2008-2010 crash. But 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.

Suggested read: Quality is forever

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. Easy to say now, "Who had the nerve to buy then?" But remember - every single trade during those months had both a seller and a buyer. Those 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 point. Looking back at any decline in the past, don't 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 good 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 markets decline, the media narrative shifts to predicting doom, and many investors start questioning their strategy. But think about it - has abandoning your investment plan during market turbulence ever been the right choice? History suggests quite 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 disaster, remind yourself of 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 really are - temporary setbacks in a journey that has consistently rewarded patient, disciplined investors. After all, you already knew all this - sometimes, we just need a gentle reminder of what we already know.

So, how do you feel about this non-crash now? As I said at the start, you already knew all this - sometimes, we just need a gentle reminder.

Also read: An act of optimism