Letters to the Editor's Note

Dhirendra Kumar's Editor's Note, 'The algorithmic amplification of fear', published on January 25, 2025, highlighted the disconnect between market reality and social media-driven panic. The thought-provoking piece drew considerable feedback, reflecting the concerns and perspectives of our readers.

As a token of appreciation, we dedicate this section to our readers, whose insights and engagement continue to foster conversations around long-term investing.

Summary

If one were to judge solely by social media, it would seem that the stock market is in a catastrophic downturn. In reality, the correction has been modest. The Sensex remains up 8.8 per cent over the past year, and over five years, the returns remain strong despite the Covid-19 crash.

What we are witnessing is not a crisis but a natural valuation adjustment. Some companies have fallen more than others, but this is the market functioning as expected - separating the good from the bad.

However, social media amplifies negative sentiment, creating an illusion of crisis. Platforms are designed for engagement, and nothing fuels engagement like fear and outrage. This self-reinforcing negativity can cloud investors' judgement, making it harder to stay rational.

Ironically, history shows that periods of widespread pessimism often present excellent investment opportunities. When everyone is fearful, valuations tend to be more reasonable. However, social media-driven negativity makes it psychologically harder to act on these opportunities.

The key lesson for investors is to maintain perspective. Over meaningful timeframes, markets remain strong. The best approach is simple but difficult: continue regular investments, focus on fundamentals and resist the urge to follow social media sentiment. Market corrections are not disasters but natural occurrences, much like seasonal monsoons.

Rather than attempting to time them, investors should build resilient portfolios with diversification and sufficient liquidity. Social media is built for engagement, not investment advice. While useful for staying informed, it should never dictate financial decisions. So, the next time market panic floods your feed, pause and consider whether it's genuine analysis or just the algorithm amplifying fear. Staying rational will serve your investments - and returns - far better.

What our readers say

I am Dr Bharat S Rastogi, and I am practising in Ghaziabad. I am a huge fan of Mutual Fund Insight and Value Research. In fact, I would credit only you guys for all the financial success in my life.

I was thinking the same, and your email confirmed my theory. I want to take this opportunity to thank you and your team for being a beacon of guiding light in my financial growth journey.

I have lived the life of a king while earning a peasant's money just because of wise financial decisions at the right time. Thanks again, and keep up the good work. - Bharat

I love reading all your write-ups, which are always very informative and soothing, especially during times of market turbulence.

If I remember correctly, I have been your reader for over 22 years and have made life-changing financial decisions based on the information I absorbed from your articles.

Keep going, Dhirendra! - Lalit Singh

Sir, it is a superb article, a spontaneous outcome of your impeccable professionalism and long association with the stock market. I have been following you for the past 15 to 20 years since you started appearing in TV discussions, etc.

Thanks, and keep up the good work, sir. - Gurumoorthy Swaminathan

I endorse your views entirely. Over the past five years or so, I have built up a portfolio of stocks in addition to mutual fund investments. I have been booking profits periodically from my stock portfolio.

Although a few stocks have witnessed a drawdown, I find nothing particularly alarming, especially as I do not need to sell any of my stocks right now. As I see it, the loss is entirely notional, and prices will appreciate with time.

On the contrary, I have picked up a few stocks in the past month that had been on my waiting list for over six months and have now reached the price at which I wanted to buy them. I hope for a little more drawdown, which may or may not materialise. But I will not pick up stocks at a higher cost than my self-calculated cost.

Your advice is reassuring in this context. - Anil Jain

I like how well the conviction is maintained and communicated to investors. It's reassuring, as we receive communication frequently in today's fast-paced world, constantly bombarded with information and noise. - Karan Shah

A good, timely reminder to investors. Short-term volatility is a passing phase, especially if a person is a long-term investor. Also, multiple factors are causing this volatility. The election was one, followed by the Union Budget 2025.

A huge gap lies between investors and traders. This is an inspiring message for investors and traders who have failed, along with some investors' success points. Their patience and attitude/behaviour can help. Thanks for your dedication to make others smile with their portfolios. - Arvind

Your advice about maintaining patience during a market correction and how to approach the buzz on social media about worsening conditions is the best advice at an opportune time. This will help investors like me overcome the negativity surrounding social media. - Milind Deshpande

This article was originally published on February 15, 2025.