Every market crash looks obvious in hindsight. During the crash, however, it feels unprecedented, catastrophic, and permanent. This is the nature of market cycles — and the nature of human fear.
When your portfolio drops 20%, your brain triggers the same threat response as a physical danger. Cortisol spikes. Decision-making shifts from the rational prefrontal cortex to the reactive amygdala. In this state, selling feels like relief. It's not — it's locking in a loss and missing the recovery.
Every major market crash in Indian history has been followed by a recovery that dwarfed the decline. The 2008 financial crisis saw Sensex drop 60%. By 2010, it had recovered fully. The COVID crash of 2020 was even faster — a 40% drop in weeks, a full recovery in months, and new highs within a year.
Investors who exited during the COVID crash locked in a 40% loss. Investors who stayed invested saw those same assets double within 18 months.