A Five-Step Guide to Surviving the Market Crash

As I write this, Indian equity markets are down by roughly 5%. This is undeniably a testing time for equity investors. Here’s my two cents’ worth, on how to survive the market crash:

✅ Don’t Panic

When markets crash sharply, it isn’t uncommon for investors to panic. However, now is the time to stay calm, and not succumb to the frenzied environment. Acting in a panic-stricken state is akin to a surefire recipe for flawed investment decisions. Resist the temptation to sell investments; that will simply convert a notional loss, into an actual loss. Finally, steer clear of the temptation to frequently check your portfolio.

✅ Ignore the Soothsayers

Whenever markets crash, certain ‘market experts’ come crawling out of the woodwork, and make predictions. They will explain in great detail as to why markets crashed, and even predict what is next in store. Guess what, none of these soothsayers predicted the current market crash. Neither do they know what will happen next. They are seeking their 15 minutes of fame. Your interest will be best served by ignoring them.

✅ Introspection is the Key

Remind yourself that equity investing necessitates a long-term investment horizon.

Remind yourself that market crashes are par for the course in equity investing.

Remind yourself of the goals that you planned to accomplish with your equity investments, be it wealth accumulation, providing for your children’s education, or retirement. Selling investments at this stage will likely hamper those goals.

✅ Don’t Discontinue SIPs

Do not discontinue ongoing investments via the Systematic Investment Plan (SIP) route. SIPs operate on the concept of rupee-cost-averaging. A market crash like the present one is when their utility comes to the fore. An investment at this stage will fetch you more units and reduce the total investment cost. This could well be the right time to double down on your investments. Like other items, equities should also be bought when their prices are low (read crashing).

✅ Keep the Faith

A big part of successful equity investing is being optimistic—the faith that the future will be better than the present. Now would be a good time to remind yourself of the robust rally that equity markets experienced post-Covid lows. If that rally didn’t last forever, neither will the market crash.

The truth is that no one knows what’s next in store for markets. This is neither the first time that markets have crashed, nor will it be the last time. That’s just the nature of the beast. As investors, we can’t control how markets behave. Instead, we should focus on what we can control—our actions.

Let’s stay calm and resolute. This too shall pass!

Of Trump, Market Volatility, and Investor Behaviour

Back in 2007-08, I used to run a financial planning chat for one of the most popular websites in the country. Then the global financial crisis hit, and gloom set in. Investors (who were rank strangers) hurting from the market crash and bleeding portfolios, would often vent their anger at me.

A typical chat session could be amusing; investment-related queries would be interspersed with jibes and cuss words; the poor moderator had his work cut out. Bizarre as it sounds, some blamed me for the downturn, and perhaps cursing at me provided them succour.

Cut to 2025, a similar scenario is playing out. Dynamics have changed but not investor behaviour. Now, investors are split into two segments, with one trolling the other.

Back home, for a while now, economic growth had slowed down, market valuations were stretched, and earnings growth had disappointed. If Indian markets seemed ripe for a decline, developments in the US proved to be the proverbial straw that broke the camel’s back. In the US, president Trump began his second term in a bombastic manner with outrageous statements and disruptive policy decisions. Expectedly, equity markets have been engulfed in volatility leading to investor discomfort.

Here's where things get truly weird: social media is full of Indian investors venting at others, for ‘supporting’ Trump. Seemingly, the perception is that those in favour of Prime Minister Modi also support Trump because of their supposed camaraderie; conversely, those against Modi were rooting for Kamala Harris. At present, the anti-Modi/anti-Trump brigade is blaming the pro-Modi/pro-Trump section for market volatility.

That rationale is so far-fetched that it’s laughable. No Indian citizen voted for Trump, neither did they have a say in his policy decisions. Then again, there are always investors who get flustered when markets crash, and feel the need to act out.

Making whacky statements on social media is relatively harmless, but letting those emotions drive investment decisions can have serious consequences.

Investors must understand that risks are inherent to equity investing. This is especially noteworthy for those who have witnessed a nearly secular upturn, post Covid lows. Market volatility is par for the course, while investing in equities. Even robust investments will bleed when markets experience a sharp downturn. That’s the nature of the beast.

Investors who don’t have a stomach for volatility need to re-asses their equity investments. Those who are up for the ride, with all its highs and lows, must ‘learn to be still’ in volatile phases. Like it or not, emotions can be one's worst enemy while investing.

On a lighter note, if trolling others could solve one’s woes, then several active social media users would have been the happiest and wealthiest individuals on earth 😀