nosedive

Bloodbath. Nosedive. Crash. The terror terminology has been unremitting and dramatic over the last few days. Constant reminders wherever you turn about how much doom and gloom there is all around the globe.

And how the markets are in a blue funk. A global pandemic. Recession looms. War is everywhere, as is Zika. Oil is cheaper than Evian. Nobody’s making anything anymore and nobody is buying what isn’t being made either.

Politically, our Modi-fication doesn’t seem to be working out too well. And elsewhere, the Trump of doom seems closer than ever, and it’s a hairy situation.

Emotionally, this is a time to panic. To give in to the terror. To stop investing. To pull out your investments. Turn them into cash. Stuff it under your mattress until sunnier days dawn.

When it’s time to panic, there is no better advice than the words inscribed “in large, friendly letters” on the cover of the indispensable guide to the galaxy:

“Don’t Panic”

(And always bring a towel to a bloodbath.*)

Vedantic philosophy urges us to replace the emotional with the rational. Follow your mind, not your heart.

Taking that to heart and keeping that in mind, here are some other things to bear in mind:

  • Markets have fallen before. Plenty of times. Dramatically and desperately.
  • They have always risen thereafter. Inevitably. As the morning follows the night, even it’s a long, cold night.
  • When “everybody” is selling, there is somebody out there buying. Somebody who still thinks it’s worth buying when you don’t.
  • You can write that off to the ‘there’s a bigger fool out there’ school of thought, which is brother to the ‘there’s a sucker born every minute’ school.
  • Or, you can ponder on the first two points above.
  • And then, ponder on that dude who’s buying the market like it’s on a Valentine’s Day sale.
  • Because, that’s just what it is: on sale
  • You can get in cheaper than before, get more for your buck and stock up your cupboard with scores more goodies than you could before the sale.
  • But do keep in mind that it could be a long, cold night before the sun rises again, so don’t sell your security blanket (the one that’ll keep you warm through that night) to get in on the sale.

Eschewing any more laboured metaphors, if you have some excess money that you don’t mind not seeing for some unpredictable time, invest in equity every time the market crashes. If you don’t have any excess money, do keep up your systematic investing even if it looks like the end of the world. Because it isn’t. The market WILL rise again. When is unpredictable but unless you’re in Japan, it WILL.

It makes sense to keep adding to your equity portfolio during these times because these times will end and that’s when your investment during these lean times will really, really pay off.

Patience never hurt anyone. Panic does everytime.

*If you don’t get the reference to context, do read that excellent trilogy in six parts: The Hitchhiker’s Guide to the Galaxy by Douglas Adams