Wealth creation advise: Like Diwali, the stock market drop is a festival for shopping, but only stocks worth buying Yet, this reaction transforms temporary market fluctuations into permanent personal losses. The math of investing is brutally simple—every stock you sell in fear must eventually be repurchased at a higher price if you want to participate in the markets long-term wealth creation
Dhirendra Kumar
CEO, Value Research
Jason Zweig, who is among the two or three best personal finance writers in the world, once wrote, “My job is to write the same thing between 50 and 100 times a year in such a way that neither my editors, nor my readers will ever think I am repeating myself.” I can completely empathise with him; I’ve been in the same boat for decades.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} In this field, the fundamental principles of wealth-building rarely change—start early, save regularly, invest carefully, trust equity, avoid unproductive debt, and think long term. Yet, each week, I sit down to share these permanent truths through fresh perspectives, new examples, and current context that can appear relevant to today’s readers. The challenge isn’t finding new truths; it’s helping readers rediscover the old ones in ways that click with them and create that moment when interest and knowledge transition to genuine understanding.
Of course, the job is made easier because, at the fundamental level, readers, too, need the same points to be emphasised again and again, and the same warnings offered repeatedly. For instance, the perennial allure of market timing has made the current market decline even more attractive. No matter how often one warns against it, each market cycle brings a fresh wave of investors convinced that they can spot the perfect moment to buy or sell. Or consider the fatal attraction of derivatives, hot tips and investment fads like crypto. The packaging changes, but the targeted speculative impulse remains unchanged. What makes financial writing both challenging and rewarding is that people are remarkably consistent in their behavioural patterns, even as they convince themselves that ‘this time it’s different’. Perhaps that’s why the best financial advice often feels obvious when stated, and difficult to follow in practice.
A few days ago, Zweig posted an interview on his blog that he conducted 24 years ago. The interview was titled ‘Wall Street’s Wisest Man’ and was conducted by an investment manager named Charley Ellis. The interview overflows with investing wisdom. The answer to the very first question is worth careful reading and thinking about by every investor in India right now.
Q. You’ve often said long-term investors should root for stocks to go down, not up. Why?
A. If you’re buying something, wouldn’t you rather pay less than more? When stocks get cheaper, how can that not be good news for a long-term investor? There are very few times when you should be bold, and history shows that those times are precisely when it seems you should be most afraid. It’s cockamamie crazy to sell stocks after they drop. Instead, you should say, ‘Today there’s a first-rate bargain, and I’m buying.’
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I find it remarkable how timely Ellis’s words feel today, even though they were spoken almost a quarter of a century ago. When the markets decline 6-7%, as they have now, the natural impulse is to see danger and retreat. Yet, this very reaction transforms temporary market fluctuations into permanent personal losses. The mathematics of investing is brutally simple every stock you sell in fear must eventually be repurchased at a higher price if you want to participate in the market’s long-term wealth creation. This is why experienced investors often say that the best investment decisions feel uncomfortable at the time they’re made.
Consider, too, that a 6-7% decline, while grabbing attention in headlines, is quite modest in the broader scheme of equity investing. For perspective, we’ve weathered multiple drops of 20-30%, or more, over the past two decades, including the huge plunges of 2008 and 2020. Yet, here we all are, with the markets having multiplied our wealth several times since then. Ellis’s wisdom reminds us that these periodic declines aren’t bugs in the system; they’re features that create opportunities for the disciplined investor.
Like Diwali, the market drop is a festival for shopping, but only stocks worth buying. Don’t be fearful.
The Auhtor is CEO, VALUE RESEARCH
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This story originally appeared on: India Times - Author:Faqs of Insurances
