Buy When There’s Blood on the Streets

Let's talk about something that scares everyone: the stock market will crash again. Maybe not tomorrow or next year, but it will happen. It always does.

For most people, this is a scary thought. They remember the sick feeling of watching their money go down, the bad news everywhere, and the fear that makes them sell everything in panic.

But what if I told you that these scary moments are not the end? They are actually the best times to make money. There's an old saying: "Buy when there's blood in the streets." This means when everyone is scared and selling, that's when you should be buying.

This isn't magic or a secret trick. It's a simple plan based on three things:

Look at the past – Market crashes follow patterns

Believe in the numbers – Big falls are always followed by big rises

Control your mind – Your own fear is your worst enemy

This guide will explain each of these in simple words. By the end, you won't be scared of the next market fall. You'll see it as your biggest chance to make money.

Part 1: Don't Panic – This Has Happened Many Times Before

When a crash happens, it feels new and different. The news talks about new problems. In 2008, it was about banks closing. In 2020, it was about COVID. It always feels like "this has never happened before."

But history tells a different story. If you look at the last 50 years, market crashes are normal. They happen again and again. By studying them, we can prepare.

1973-74 Bear Market: -48%

1980-82 Bear Market: -27.10%

2000-02 Dot-Com Crash: -49%

2008-09 Financial Crisis: -56%

2020 COVID Crash: -34%

2022 Inflation/Rate Hikes: -25.40%

2025 Tariff Crash: -10%

Truth #1: Big Market Falls Will Definitely Happen

Think of this like rain in Mumbai. You don't know exactly when it will rain heavily, but you know it will happen every monsoon. So you keep an umbrella ready.

The stock market is the same. Since 1970, the US market has fallen by 25% or more about once every 5-10 years. Some crashes are quick (like COVID in 2020). Some are slow and take years (like 2000-2002).

The lesson: Since you can't predict when it will happen, you must always be ready. Your money plan should be strong enough to handle bad times, not just good times.

Truth #2: No Single Investment Is Always Safe

Many people think some investments are always safe. For years, people believed in keeping 60% in stocks and 40% in bonds. Then 2022 came, and both stocks AND bonds fell together. The "safe" plan didn't work.

In the 1970s, only gold and commodities worked. In 2008, even gold fell at first. There is no magic safe investment that works every time.

The lesson: Real safety comes from understanding that different problems hurt different investments. A good plan is flexible and ready for different situations.

Truth #3: Recovery Takes Time – And That's OK

Crash Event	Decline	Recovery Time	Next Year Return
1973-74 Bear Market	-48%	7+ years	+38%
2000-02 Dot-Com Crash	-49%	5 years	+26%
2008-09 Financial Crisis	-56%	4.5 years	+60%+
2020 COVID Crash	-34%	4 months	+75%
2025 Tariff Crash	-10%	2 months	Ongoing

"When will I get my money back?" This is the most painful question during a crash. The answer is: it depends.

After the 2020 crash, the market came back in just 5 months. After 2008, it took 4.5 years. After the 1973-74 crash, it took over 7 years.

If you expect quick recovery, you will be disappointed. When the market is still down after a year or two, you'll want to give up and sell.

The lesson: Your plan must be ready to wait. You are not just investing money – you are investing time. Be patient and you will succeed.

Part 2: The Rubber Band Effect – Why Crashes Are Great Opportunities

This is the most important idea. Understanding this will change how you see every market fall.

Imagine a company that is truly worth ₹100 per share. During good times, excitement might push the price to ₹150. The rubber band is stretched up.

Then a crash happens. Everyone panics. Everyone sells. The price falls to ₹50, even though the company's business hasn't really changed. Now the rubber band is stretched down.

Here's the important part: When you stretch a rubber band down, it stores energy. The more you stretch it, the more energy it has. When you let go, it will snap back hard.

Why Recovery Always Happens

Recovery happens for three simple reasons:

Good companies adapt – Strong companies cut costs, try new things, and survive. They find ways to grow again.

Economies grow – People are smart and creative. New businesses start. The government helps. India's economy has grown 6-7% every year for decades, despite many problems.

Smart money comes back – After some time, smart investors see that prices are too low. They start buying.

History proves this. Every single major market crash has been followed by recovery. Every.Single. One.

S&P 500 Chart

After falling 56% in 2008-2009, the US market went up over 60% in the next year. After the 1973-74 crash, the market almost doubled in a few years. The bigger the fall, the bigger the rise back up.

This effect is even stronger for small companies. During panic, their prices fall a lot. But when recovery comes, they can rise very fast.

Notice the pattern: After every crash, the biggest gains came in the first year of recovery. 38% after 1974. 60% after 2008. 75% after 2020. These life-changing returns come only if you're still invested. A professional equity PMS manager stays invested in quality stocks during crashes, keeps cash ready to buy at low prices, and removes emotion from decisions. While you might panic, they follow a disciplined plan.

Every single crash was followed by recovery. ALL of them. The equity market always came back. While individual investors panic and run to fixed deposits during crashes, equity PMS managers stay focused on stocks – because that's where real money is made. While you might sell at ₹50 fearing it will fall to ₹30, a PMS manager is buying at ₹50 knowing it will return to ₹100.

The Biggest Mistake You Can Make

The biggest danger to your money isn't the crash itself – it's missing the recovery.

The biggest gains usually happen in the first year or two after the bottom. These are huge jumps. If you sell in panic and keep your money in cash, waiting to "feel safe" again, you will miss these gains. By the time the news is good, most of the opportunity is gone.

Your Simple Plan

Stay in the game – Keep some money invested all the time. You have to be playing to win.

Keep some cash ready – This is your buying money. When the market crashes and prices are low, use this cash to buy more.

Don't trust your feelings – The recovery will start when the news is still bad. Your brain will say it's a trap. Your plan must be stronger than your fear.

The math is clear: When fear is highest, the chance to make money is biggest. Your job is to be brave enough to trust the numbers, not the mood.

Part 3: Your Worst Enemy Is Not the Market – It's Your Own Brain

You can know all the history and understand everything. But in a real crash, that knowledge can disappear. Why? Because your brain is built to keep you safe, not to make smart money decisions.

During panic, your basic instincts take over. They are strong and automatic. Unfortunately, in the stock market, these instincts tell you to do exactly the wrong thing.

Brain Trap #1: The Pain of Losing

Scientists have proven that losing ₹1,000 hurts about twice as much as gaining ₹1,000 feels good. This isn't logical, but it's how we're built. During a crash, this pain is terrible. Your account shows losses every day. Your brain screams, "MAKE IT STOP!"

The fastest way to stop the pain is to sell. But selling at the bottom turns a temporary loss into a permanent loss.

Brain Trap #2: Thinking Today Will Continue Forever

Our brains think that what's happening now will keep happening. After months of rising prices, we think prices will keep rising forever. After months of falling prices, we think they'll keep falling forever. This makes us think "this time is different" exactly when history says it's the same.

Brain Trap #3: Following the Crowd

For most of human history, being alone meant danger. There is comfort in doing what everyone else does. When the TV news, your friends, and everyone is saying "SELL!", selling feels right and safe. Buying when everyone is selling feels scary and stupid – even when it's the smartest thing to do.

The Only Answer: Write a Plan

You cannot beat these instincts with just willpower. During real panic, willpower disappears. The only answer is to write a plan today, when you are calm.

Your plan is a set of simple rules you write now. It takes decisions away from your scared brain during a crash.

Example buying rule: "If the market falls 20%, I will invest extra ₹5,000 from my savings. If it falls another 20%, I will invest another ₹5,000."

Example balance rule: "Once 2 year, I will check my investments. If stocks have grown too much, I will sell some and buy bonds. If bonds have grown too much, I will sell some and buy stocks." This makes you buy low and sell high automatically.

Example selling rule: "I will only sell if the reason I bought has changed. I will NOT sell just because the price is going down."

Getting Help Is Smart

This is why working with a good financial advisor or following a strict plan is so valuable. During a crisis, their main job isn't to predict the future. It's to keep you calm.

They can tell you, "This feels terrible, but look at this history chart. This happened before, and recovery always came." They help you follow your plan when you want to give up. They turn your fear into calm thinking.

Conclusion: The Crash Is Your Chance – Are You Ready?

Market cycles don't create money from nothing. They move money. They move money from scared people to patient people. From emotional people to calm people. From people who follow crowds to people who follow plans.

The next crash is coming. When it comes, it will do two things:

Test how strong you are

Give you the best prices you may see for years

Your success won't come from predicting the crash. It will come from being prepared before it happens.

If you'd like to discuss your portfolio or explore how Xylem can help you navigate this market, consult with us here.