“Be fearful when others are greedy, and greedy when others are fearful.” — Warren Buffett
Priya discovered the stock market in October 2021, which was possibly the worst time to discover it. Everything was going up. Her SBI Life insurance stock was up 40%. Her friend’s Zomato shares had doubled. Financial Twitter was full of people posting screenshots of 200% returns. “Equities always go up,” someone said on a YouTube channel with 3 million subscribers.
She invested ₹1.5 lakh — savings from two years of careful budgeting — across five mid-cap stocks. By December, she was up 22%.
Then 2022 happened.
The market correction was not a crash — it was a rational recalibration after two years of pandemic-era excess. Nifty fell about 15% from its peak. Some of Priya’s mid-caps fell 35-40%. By May, her portfolio was down ₹45,000.
She sold everything. “I can’t watch this anymore,” she told her sister. Two months later, the market recovered. By the end of the year, her original five stocks had largely returned to their pre-sale levels.
Priya had successfully bought high and sold low — the single most common way retail investors destroy wealth.
Why We’re Wired to Do This
Behavioural economists have a name for what happened to Priya: loss aversion. Research consistently shows that humans feel the pain of a financial loss roughly twice as intensely as they feel the pleasure of an equivalent gain. Losing ₹10,000 hurts more than gaining ₹10,000 feels good.
Combined with recency bias — our tendency to assume that whatever just happened will continue happening — you get a powerful psychological cocktail that makes panic-selling feel rational. “The market is falling. It will keep falling. I should get out.” It’s almost never the right call.
What the Data Shows
The DALBAR Annual Quantitative Analysis of Investor Behaviour consistently shows that average investors earn significantly less than the index — not because markets are unfair, but because investors buy after markets rise and sell after they fall. The behaviour gap costs investors several percentage points of return every year.
The same pattern plays out in India. AMFI data consistently shows that SIP inflows drop during market downturns and spike during bull runs — the precise opposite of what good investing looks like.
The SIP Solution
The reason SIPs work is not just compounding — it’s forced discipline. When you set up a monthly SIP, it continues regardless of what the market does. During a correction, your SIP buys more units at lower prices. When the market recovers, those cheaper units deliver higher gains. This is rupee-cost averaging, and it systematically exploits the volatility that panic-sellers are destroyed by.
Priya has since restarted her investments — this time through SIPs managed with the help of a financial planner. She has someone to call when markets fall. She hasn’t sold since.
The Lesson
The market falling is not a signal to exit. It is, historically, a signal to stay — or even to invest more. Fear is not a strategy. Staying invested is — and having someone in your corner who reminds you of that when you need it most makes all the difference.
The Planner Advantage
During a market crash, a financial planner is not just an advisor — they are a behavioural coach. When Priya’s portfolio was down ₹45,000 and she was ready to sell everything, a planner would have sat with her and walked through the numbers: what has historically happened after corrections of this magnitude? How does her goal timeline look even at the current depressed value? Is the business case for her investments broken — or is only the price broken? That conversation, at that exact moment, is often the difference between locking in a loss and participating in the recovery. No app, no article, and no YouTube video replaces a calm human voice at the right time.