Stay calm, stick to your plans and be open to opportunities
Falling markets are not new, but that does not stop the sense of panic that grips investors in every rout. So here is some data that can help you keep a cool head amidst the tumult.
Duncan Lamont
Markets tumbling, red all across trading screens, investing apps, and mainstream news. Heart pounding. This is my pension, my housing deposit, my children’s savings, my client’s savings. We’ve been here before. But it feels different. It ALWAYS feels different.
Crises happen. The stock market falls 20% once every four years, on average, 10% most years. It’s easy to forget this. Even if you’re a seasoned investor, how much comfort does that give you when you’re in the thick of it?
The simple reality is that the stock market has tremendous power to help grow wealth in the long-run but short-term volatility and risk of falls are the price of the entry ticket.
Are you able to think back to the fact that the global stock market has more than doubled the value of your savings in the last five years, even after the recent hit they’ve taken (MSCI World index in USD terms)? If you’d sat in cash you’d only be up 14%. $10,000 invested in the stock market would be worth $20,700 today compared with only $11,400 in cash (data for the five years to 4 April 2025).
It takes incredible self-control to be so objective and emotionally detached. It’s easy to say “don’t worry” – but that’s not how most of us are wired.
But what we can do is turn to objective, data-driven analysis to help temper that emotional response. To shift from a knee-jerk reaction to a more logical and reasoned one. For most investors, the best course of action will be to stay calm, stick to your plan and, rather than be scared by volatility, to be alive to the opportunities that it may present.
1. 10%+ falls happen in more years than not, 20% falls happen once every four years
Taking world stock markets (as represented by the MSCI World Index) 10% falls happened in 30 of the 53 calendar years prior to 2025. In the past decade, this includes 2015, 2016, 2018, 2020, 2022 and 2023.
More substantial falls of 20% occurred in 13 of the 52 years (once every four years, on average – but if it happens this year, that will be four times in the past eight years, in 2018, 2020 and 2022).
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