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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Don’t Panic

Posted by Muthu on December 17, 2014

There is a panic in markets all over the world due to nearly 50% fall in oil prices over last 5 months, Russian crisis, weakening of emerging markets currencies against dollar, fear of global recession, fear of some sovereign defaults etc.

For those of you who are our long term investors, this kind of panic situations are not new. We face almost one once in a year or two. In stock markets, you are always given frequent tests to check your conviction levels. Only investors who pass these tests are given the 18% kind of returns the market offers to those who stay invested.

Two months ago, we shared a CRISIL data as to how those who stayed invested in equity funds for 17 years got an annualised return of 22.6%. Those 17 years had innumerable panic like situations; both domestically and globally. But those who sat patiently were hugely rewarded. Indian markets have given 260+ times returns over last 3 decades when both globally and locally we went through one crisis after another.

Panic and euphoria; booms and busts are perfectly normal. This is how it has been and this is how it would be. Moreover, for good or worse, we are all getting better informed. Even 10 years ago, we didn’t have the kind of information we posses now on an everyday basis; be it RBI policies, global crude prices, inflation figures, changes in global markets, commodity prices, fed policies etc.

Some experts opine that this spread of information has shortened the span of cycles. The ups and downs in the market have become more frequent than ever. Increased volatility is the price for instant information. 10%+ corrections are frequent. 20%+ corrections happen on a regular basis. In your investing life, you may even see 50%+ corrections three of four times. This is how it would be.

We all by now know and have even experienced the benefits of staying the course despite all the negativity. Moreover, India is one of the few countries which are in an advantageous position now globally. In short term, like everyone else, we would be impacted by global happenings; as sentiments drive markets in the short term. In the long run, we are in a structural growth both in terms of economy and markets; as fundamentals drive markets in the long term.

Many of you tell me that you no longer need constant reassurances as you’ve understood the benefits of staying the course and investing for long term. I’m glad to hear that. However it is my responsibility to constantly reinforce the power of compounding, role of time in investments, sitting patiently, investing regularly, investing for long term etc.

You’ve heard this John Bogle’s quote from me many times. Please listen now for one more time.

Stay the course. No matter what happens, stick to your program. I’ve said ‘stay the course’ a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.

Don’t panic. Stay the course.

6 Responses to “Don’t Panic”

  1. Jayant Fine said


  2. avinash said

    thank you mutthu for encouraging us to stay on..keep up the good work

  3. Abhijit said

    This post will provide an anchor for us (the budding investors) in situations like this.

  4. abhijeet said

    I see active portfolio management is not your preferred style.

  5. Dear sir,
    Very good article @ this moment………..keep it up………..

  6. srinivas said

    Very correct

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