The Risk of Panic Vs the Reward of Patience

When markets are volatile, it’s natural to feel worried—after all, it’s your hard-earned money. But history tells a different story—bear markets don’t destroy wealth; they transfer it. Every time panic takes over, stocks don’t vanish. They move from those who react emotionally to those who stay patient and disciplined. As Warren Buffett puts it: “During a bear market, stocks return to their rightful owners.”

By staying disciplined and weathering volatility, you’ve already taken the hardest yet most rewarding step toward long-term success. Instead of reacting to short-term noise, let’s shift the focus to what’s unfolding beneath the surface—and why your resilience today positions you for long-term gains.

The Market Drawdown: What’s the Real Impact on Your Portfolio?

• BSE 500 Performance: -16.63%

• Smallcaps: Down 30%

• Large Caps: Down 16-40%

• Your portfolio returns over the same period: -3% to -15%.

• Alpha Generated: 2% to 11% (the additional returns you earned above the benchmark).

At first glance, the decline in your portfolio might seem concerning. However, when you compare it to the broader market’s nearly 17% drop and small-cap stocks plunging by 30%, your disciplined strategy has already preserved significant capital. In fact, your portfolio was shielded from the full impact of the downturn, outperforming the market benchmark with an alpha ranging from 2% to 11%.

This means that, While the market struggled, your portfolio performed better, preserving and growing your wealth despite the downturn. This outcome wasn’t by chance—it’s the result of a carefully structured planning designed to balance risk and opportunity. Instead of reacting impulsively to market swings, your portfolio was built to navigate volatility and capitalise on opportunities without sacrificing long-term stability. Let’s now break down how these strategies have protected your wealth and positioned you for future growth.

Resilience Is Not Luck—It’s Strategic Choice

Your portfolio’s resilience isn’t a fortunate coincidence. It’s the result of a deliberate, well-structured investment approach designed to limit downside risk while capturing long-term growth opportunities.

1. Proactive Risk Management: Resilience begins long before volatility strikes. In June 2024, our research model identified overvaluation trends in certain market sectors, particularly small and mid-cap stocks. Recognising that these areas were becoming increasingly risky, we took decisive action to pivot away from them. This wasn’t a reaction to market turmoil—it was a planned move to protect your wealth and position it for more promising opportunities. By anticipating these risks early, we made adjustments to safeguard your portfolio, ensuring it was better equipped to handle the market challenges ahead.

2. Prudent Asset Allocation: From June to December 2024, we rebalanced your investments to reduce exposure to riskier small and mid-cap stocks. We transitioned your portfolio toward more stable asset classes, such as Hybrid funds, Long-Short funds, and Sectoral Multi-Cap funds, where we saw better growth potential with controlled risk. By December 2024, your portfolio was strategically aligned, with a heavy allocation (60-70%) in large-cap stocks, which tend to be more stable during market volatility. We also incorporated 15-30% debt to provide additional stability.

3. Capitalising on Market Shifts: As the market began to decline in January 2025, your portfolio was already in a prepared position to handle risks. With a solid foundation of large-cap stocks and a strategic allocation to debt, you were insulated from deeper losses.

This positioning meant that when the market dipped, your portfolio didn’t just survive—it was protected. This is the essence of planning: prudent allocation that not only shields you from downside risk but also positions you to capitalise on future gains.

What This Means for You

It’s easy to focus on immediate drawdowns in volatile periods. But stepping back to see the bigger picture reveals the true advantage of a disciplined approach.

1. Markets Will Always Have Cycles: Every correction, no matter how severe, eventually gives way to recovery and growth. Historically, market declines have been temporary, while the long-term trajectory has been upward. A disciplined investor recognises that short-term fluctuations are simply part of long-term wealth creation.

2. Your Portfolio Is Built to Withstand Volatility: The fact that your drawdown is significantly lower than the broader market reflects a key strength: stability during uncertainty. By limiting downside risk, your portfolio avoids deep losses that require extended recovery periods—helping you stay on track toward your financial goals.

3. Protecting Capital Today Means Being Positioned for Growth Tomorrow: Market recoveries often begin when pessimism is at its peak. The investors who benefit the most are those who remain invested, rather than those who react impulsively. Exiting at the wrong time means missing the eventual rebound and locking in losses permanently.

4. The Cost of Market Timing Is Greater Than the Cost of Volatility: Periods like these often trigger a rush toward "safe" assets, leading many investors to exit or pause their investments. However, data consistently shows that missing even a handful of the market’s best recovery days can significantly reduce long-term returns. The focus should not be on reacting to short-term movements, but on ensuring your portfolio remains aligned with your financial goals.

The Bigger Picture: Where Do We Go From Here?

Right now, the market is in a phase of recalibration. Sentiment is low, uncertainty is high, and asset prices are reflecting fear rather than fundamentals. But history has repeatedly shown that downturns give way to expansion. Just as previous corrections have paved the way for new market cycles, the shift will happen again.

While no one can predict exactly when, we can ensure that your portfolio remains well-positioned—not just to withstand the current volatility, but to fully capitalise on the eventual recovery.

Key Takeaway

1. Protection from Downturn: When the market dropped by 16.63%, your portfolio only declined by a range of -3% to -15%. This means that your portfolio was more resilient than the broader market, suffering smaller losses during the downturn. It highlights that your strategy helped protect capital by reducing exposure to riskier assets

2. Strategic Planning: The disciplined, proactive strategy of reallocating assets and managing risk effectively minimised exposure to volatility.

3. Long-Term Resilience: Your portfolio’s ability to weather the downturn highlights its long-term stability and growth potential.

4. Wealth Preservation: Despite market struggles, your portfolio not only protected but also positioned you for future growth, demonstrating the value of patience and strategic planning.

However, if you'd like to discuss your portfolio's positioning further, we're here to help. Whether it's to review recent adjustments or explore potential opportunities, feel free to reach out.