Personal Finance By Hanif
February 13, 2025 at 03:58 AM
*Why is this Market Correction Hurting Investors More?*
Investors were used to quick market recoveries, but this time, the correction is lasting longer.
The Peak-End Rule, explained by Nobel Laureate Daniel Kahneman, states that people remember pain based on its peak intensity and how it ended.
Recent Market Corrections & Recovery Speed
✓Election (June 4, 2024): Quick recovery in 3-4 days (Peak – High; End – Low).
✓Russia-Ukraine War (Feb 2022): 11% fall, but recovery in 2 months (Peak – Medium; End – Medium).
✓Covid (March 2020): 34% crash, recovered in <4 months (Peak – Very High; End – Medium).
✓Current Correction (2024): Nifty down ~13%, Smallcap 250 down ~19%, with prolonged selling pressure (Peak – Medium; End – High).
Many investors (who entered post-March 2020) are experiencing their first prolonged market correction.
Wealth’s Advice for Investors
1. Avoid Panic & Extreme Decisions – Most investors are down 20-35%. Stay disciplined; historically, markets recover well after such corrections.
2. 2025 is the Year for Asset Allocation – Staggered investments can help, especially if markets correct another 5%. Large caps are preferred.
3. Most Event Risks Are Known – Global issues (geopolitics, tariffs) are factored in, though impacts may persist.
Key Quote: "The key to making money in stocks is not to get scared out of them." – Peter Lynch.