Markets Crash, Some Investors Buy—Here’s Why!

‘Dar Ke Aage Jeet Hai’—a phrase often used in life’s toughest moments. But does it hold true in stock markets?

Market downturns often trigger panic, leading many investors to pull back. However, past cycles show that some investors continue to invest even when markets are struggling. When the recovery happens, their approach becomes evident.

A few things stand out:

• Markets that seem at their worst have often been on the verge of improvement.

• Investing only after strong past returns means missing the early phases of recovery.

• Many investors who stay invested through bear markets see the impact when markets turn.

India’s nominal GDP has grown at around 12.5% annually, and broad indices like Nifty 50 have delivered returns in a similar range over time. While short-term fluctuations are unavoidable, some lessons from past market downturns remain relevant.

Lessons from Bear Markets 

• Equity Returns Are Non-Linear: 

Gains build up over the years but can also decline quickly. Market swings are part of the cycle.

• Fear and Greed Influence Decisions: 

Short-term reactions often drive market movements, but some investors choose to stick to their strategy.

• Time Horizons Matter: 

Rigid timelines don’t always align with market cycles. A flexible approach can help manage returns better.

• Avoid Binary Thinking: 

Markets don’t operate in extremes of only highs or lows. Decisions based on facts and trends help in navigating volatility.

• Equities and Optimism: 

If downturns create constant stress, it may be worth reconsidering investment choices.

• Market Timing Is Uncertain: 

Predicting exact highs and lows is difficult. Some investors focus on long-term trends instead.

• Market Cycles Repeat: 

Phases of extreme highs and lows eventually correct. Observing these cycles can help in making informed choices.

Market movements often resemble a pendulum—swings to extremes and eventually adjust. Each cycle brings different challenges and opportunities, shaping how investors approach the next phase.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.