Tune out the noise, stay with equity

Last month’s global selloff—marked by a 7% slide in the S&P 500 and a more than 5% dip in the Sensex—set off the usual chain reaction: a flood of alarming headlines, wall-to-wall coverage from financial experts forecasting doom, and social media timelines buzzing with everything from cautious concern to full-blown panic.

It feels like déjà vu, doesn’t it? I’m reminded of something I wrote during the pandemic about the toxic effects of excessive news consumption on investors. I noted then that the fundamental problem was one of faulty feedback loops—a concept that seems even more relevant today.

Also read: How you can invest in a fully valued market

The noise trap

Our investment decisions often get distorted by the constant noise from news channels and social media. These platforms create a sense of urgency, pushing the false idea that every market dip demands immediate action. But the truth is—most short-term market events don’t require a reaction at all.

Take a step back from the dramatic graphs you might be anxiously watching. Yes, markets have recently dropped sharply. But zoom out, and you’ll see that markets have always moved in cycles—rising and falling with regularity. What feels like a crisis in the moment often turns out to be just a small bump over the long run. A 5–7% decline, while uncomfortable, is entirely normal and doesn’t signal the need for drastic action.

Also read: The one number every investor must know—but rarely does

Here’s a reality that experienced investors already know: building wealth over time almost always involves staying invested in equities, despite the ups and downs. Sure, fixed deposits, gold, or debt funds may feel safer when markets fall—but they rarely deliver the long-term returns needed to beat inflation and grow genuine wealth. This isn’t just opinion—it’s backed by decades of data from markets around the world.

Many investors instinctively choose the most damaging response to market volatility: pausing or stopping systematic investment plans (SIPs), shifting money to seemingly safe fixed deposits, or simply remaining paralysed by fear. These reactions feel protective in the moment, but often prove destructive in the long run. The investor who retreats from equity during downturns not only locks in losses but misses the recoveries that historically follow.

Our research team at Value Research recently uncovered hard evidence of this self-destructive behaviour. The analysis is being published as the cover story of the May 2025 issue of Mutual Fund Insight. The cover story’s title is ‘Your fund made 18%, you made 8%. Where did the money go?’ Need I say more?

Missing just a few of the market’s best days between 2001 and 2025 can have a dramatic impact on your long-term returns. Consider this:

When you miss the rebound

• Stayed fully invested: 16% per annum
• Missed the 10 best days: 12% per annum
• Missed the 30 best days: 6.3% per annum

The takeaway is clear: trying to time the market—jumping in and out based on news headlines or short-term sentiment—often does more harm than good. Investors who stay the course and remain consistently invested tend to outperform those who react emotionally to volatility. In equity investing, discipline beats timing—every time.

Think long, act less

Successful equity investing demands an elimination strategy instead of a reactive approach driven by headlines. Rather than trying to predict exactly which stocks will soar, focus first on eliminating obvious risks and avoiding panic-driven decisions. It’s generally easier to identify what might go wrong than to predict what will go spectacularly right.

This approach is particularly valuable during market downturns. Instead of reacting to every alarming headline, consider whether anything has fundamentally changed about your investment thesis. Has the long-term outlook for the Indian economy transformed overnight? Have the companies you’ve invested in suddenly lost their competitive advantages? In most cases, the answer is no.

I’m often asked for investment advice, and I’ve consistently observed that most problems arise from actions (or inactions) that accumulate over months and years. Similarly, solutions require sustained, patient approaches over similar timeframes. Nothing on television, Twitter, or WhatsApp tonight will meaningfully improve your investment outcomes.

For the average investor, embracing equity without fear doesn’t mean blind optimism or ignoring genuine risks. It means developing a clear-eyed understanding that market volatility is the price we pay for superior returns. It means continuing your SIPs even when—especially when—markets tumble. It means resisting the siren call of “safety” that would lead you to abandon the asset class that has historically built wealth.

Emotional discipline wins

The true challenge of equity investing isn’t financial acumen—it’s emotional discipline. The investors who succeed over decades aren’t necessarily the most brilliant analysts; they’re the ones who maintain consistency through market cycles, resist euphoria during booms, and despair during busts.

Remember, wealth creation isn’t about making brilliant predictions—it’s about consistently making sensible decisions while avoiding major mistakes.

Sometimes, the best investment action is no action at all. So the next time markets tumble and your news feed fills with doom and gloom, perhaps the wisest response is to turn it off, maintain your equity allocation, and continue your SIPs with the quiet confidence that comes from understanding market history.

Believe me, tonight’s headlines won’t build your wealth. Your discipline will.

Also read: Why smart investors still make bad decisions

Dhirendra Kumar is the founder and CEO of Value Research, an independent investment research firm