THE MARKET CRISIS: THIS TIME, DAMAGE SEEMS TO BE REAL

Through the dotcom bust, the 2008 crisis, demonetization, the covid crash, Ukraine war, and oil shocks in between, my advice in this column has stayed the same: stay the course.

- Dhirendra Kumar

Don’t react to the news. Downturns are opportunities. This too shall pass. Readers will know the refrain. For three decades, the data has backed it. Today, I’m stepping away from that playbook.

The US-Iran war is a disruption where standard advice no longer applies. The reason matters more than the news. Most crises that rattle markets damage sentiment. This one damages things. The distinction seems small. It changes everything.

Most market crises follow a familiar pattern. Companies stumble. A sector falls out of favour. Valuations outrun earnings. Panic sets in. Prices fall. But the factories remain. So do the workers, supply chains, customers, and productive capacity. What changes is sentiment, liquidity, or the price investors will pay for future cash flows. These are mood swings in an economy that remains fundamentally healthy. By nature, they are cyclical. They pass. The conflict in West Asia is the other kind.

Long-term pain