Markets fall. It’s not a question of if, but when — and when it happens, it can feel deeply unsettling. Watching your portfolio drop by 10%, 20%, or more triggers a very human instinct: do something. Sell. Move to cash. Wait until things “settle down.”
But the evidence is overwhelming: the investors who do best over time are not the ones who react fastest during downturns. They’re the ones who don’t react at all.
Why markets fall — and why they recover
Market downturns have many causes: geopolitical shocks, interest rate changes, pandemics, banking crises, trade wars. The triggers are always different, and the commentary is always alarming.
But here’s what the data shows. Since 1900, global equity markets have experienced significant drawdowns roughly every 5–7 years. Every single time, markets have eventually recovered and gone on to reach new highs. Not quickly, not smoothly — but consistently.
“Time in the market beats timing the market. The most dangerous thing an investor can do during a downturn is panic.”
This doesn’t mean every investment recovers. Individual companies fail. Speculative assets can go to zero. But a well-diversified, globally spread portfolio has historically proven remarkably resilient over meaningful time horizons.
The cost of trying to time the market
When markets fall, the temptation to “move to cash and wait” is powerful. But timing the market requires you to be right twice: once when you sell, and once when you buy back in.
Research from Dalbar and others consistently shows that the average investor significantly underperforms the market — not because they choose bad investments, but because they buy and sell at the wrong times. They sell after markets have already fallen (locking in losses) and buy back after markets have already recovered (missing the best days).
Consider this: if you missed just the 10 best days in the JSE over a 20-year period, your returns would be dramatically lower than if you’d simply stayed invested. And many of those best days occur within weeks of the worst days — precisely when frightened investors are sitting on the sidelines.
What you should actually do
1. Remember why you invested
Your portfolio was built around your goals — retirement, financial independence, education funding, legacy. Those goals haven’t changed because markets dropped this month. If your time horizon is 10, 15, or 20 years, a short-term drawdown is a footnote in a much longer story.
2. Don’t check your portfolio daily
This sounds simple, but it matters. Frequent monitoring during volatile periods increases anxiety and the likelihood of making emotional decisions. If your plan is sound, you don’t need to watch it every day — any more than you’d weigh yourself every hour while dieting.
3. Rebalance, don’t retreat
A downturn often creates an opportunity to rebalance your portfolio — buying more of what’s fallen and trimming what’s held up. This is the opposite of what feels natural, but it’s exactly what disciplined investing looks like. It ensures your portfolio stays aligned with your risk profile and target allocation.
4. Keep contributing
If you’re still in your accumulation phase — saving and investing toward a future goal — market downturns are actually good news. You’re buying assets at lower prices. Monthly contributions during a downturn purchase more units, which compounds in your favour when markets recover.
5. Talk to your adviser
If you’re anxious, that’s a perfectly valid reason to pick up the phone. A good adviser won’t just tell you to “stay the course” — they’ll walk you through the specifics of your plan, remind you of your buffers, and help you see the bigger picture. That’s what we’re here for.
When should you be concerned?
Not all volatility is benign. There are legitimate reasons to review your strategy:
- Your circumstances have changed — a job loss, health event, or major expense that alters your time horizon or cash flow needs
- Your portfolio is poorly diversified — concentrated in one sector, one country, or one asset class
- You’re taking more risk than you can afford — if a 20% drop would force you to sell, you may be too aggressively invested
These are structural issues, not market-timing decisions. Addressing them is good planning, not panic.
The long view
Every market downturn feels like it could be “the one” — the crash that doesn’t recover. And every time, with hindsight, the right thing to do was to stay invested, stay diversified, and stay disciplined.
That doesn’t make it easy. But it does make it clear.
If you’d like to review your portfolio or just talk through what the current market environment means for your plan, we’re here to help.
