Do You Need Courage in the Falling Market?

Before You Try to Be Courageous, Ask This First...

In my last letter, Vennugopal Mittai asked a simple but powerful question:
"How to stay courageously in the market after knowing its ups and downs?"

And I realized that in this falling market, this is the question on everyone's mind. That’s when I knew—it deserved a full letter.

But before we ask how to be courageous, we should first ask:
Do we even need courage?

Most people assume that when the market falls, we must be brave.
But what if we are trying to be courageous about the wrong thing?

"The greatest risk in investing is not market crashes, but investing without knowing why."

If you don’t understand your own investments, then you’re not being courageous—you’re just guessing.

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The Swimming Pool Test 🏊‍♂️

Imagine someone pushes you into deep water.
If you don’t know how to swim, you will panic.
If you do know how to swim, you’ll enjoy the water.

But here’s the key:
❌ You’re not afraid of water.
✅ You’re afraid of not knowing how to handle it.

Now think about the stock market.
📉 Market falls → Investors panic and sell → Later regret
📈 Market rises → Investors jump back in → Later overpay

But was the market crash truly dangerous?
Or did investors panic simply because they didn’t know how to handle it?

🚨 Fear doesn’t come from risk. Fear comes from a lack of understanding.

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Are You Actually in Danger?

Before trying to be courageous, first check if you even need courage.

✅ If you own strong companies, then market falls are just noise.
✅ If you understand market cycles, then temporary drops are normal.
✅ If you have a clear investment process, then there is no reason to panic.

But if you don’t know:
❌ Why you bought a stock
❌ What your portfolio is built for
❌ How to handle a market fall

Then you are not investing—you are gambling.

A smart investor doesn’t try to be courageous first.
They first try to understand the situation clearly.

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What Should You Do in a Falling Market?

Now let’s talk about action steps. What should you actually do?

If You Understand Your Investments Well:

✅ Hold your strong stocks – If nothing has changed in the business, don’t panic.
✅ Use SIPs to buy more – If you are investing long-term, a market dip is a discount.
✅ Rebalance if needed – If your portfolio has become unbalanced, adjust it.

If You Have No Idea Why You Own Your Stocks:

🚨 Step 1: Stop adding money blindly.
🚨 Step 2: Review your portfolio. Ask:

• Do I know how these companies make money?

• Are they fundamentally strong?

• Did I buy them just because someone recommended them?

🚨 Step 3: Clean up your portfolio.

• Exit weak stocks that you don’t understand.

• Shift towards quality investments with clear logic.

🚨 Step 4: Learn & Build a Strong Investment System.

• Start with First Principles Thinking (Understand why markets work).

• Learn the basics of portfolio management (So you never panic again).

• Follow a structured process like SIPs (To invest smartly over time).

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Final Thought

Next time the market falls, don’t ask:
❌ "How do I stay courageous?"

Ask this instead:
✅ "Do I actually understand what’s happening?"

If the answer is YES, hold strong and keep investing.
If the answer is NO, stop guessing and start learning.

The better your knowledge, the less courage you need.
Because when you truly understand risk, you won’t fear it anymore.

What do you think?
How do you handle market ups and downs?

Reply and let me know. Let’s discuss. 💬

🚀 See you in the next letter.

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