The market is indeed becoming very choppy 🌊, with the stock market crash now dominating the headlines. This was bound to happen; when you mix an overvalued market with the uncertainty surrounding Trumpanomics, it’s no surprise that investor sentiment is turning bearish.

Concerns are widespread, with issues such as tariffs, conflicts in the Middle East, the situation in Ukraine, Trump aligning with Russia, and rising tensions between Europe and the U.S. contributing to a lack of optimism.

With Trump now suggesting that “disruption” is ahead, he doesn’t seem concerned about the stock market tanking in order to achieve long-term objectives. U.S. stocks tumbled after President Donald Trump refused to rule out the possibility that the economy might be sliding into recession, especially as the government cuts spending and engages in a tariff war on multiple fronts.

The S&P 500 dived 2.7% to its lowest close since September. The Nasdaq fell deeper into correction territory, dropping 4% during its worst night since 2002. The Dow dropped more than 1,100 points before reducing its loss to 890 points, or 2.08%, as stocks managed a slight late bounce.

These declines pulled the Nasdaq almost 14% from its recent high and extended the S&P 500’s retreat from its peak to 8.7%. Three weeks of selling intensified overnight after Trumps comments “What I have to do is build a strong country. You can’t really watch the stock market.”

Confidence killer indeed.

😱 Fear Sells the best…

Wall Street’s VIX (fear gauge) is surging and remains in a state of extreme fear. The crypto markets are continuing their significant downward spiral. Gold is also struggling to hold its ground as a safe haven due to ongoing selling pressure, profit-taking, and restructuring in anticipation of more uncertainty.

What occurred in the U.S. last night will undoubtedly ripple through global markets today. When the U.S. sneezes, the world catches a cold. Nothing changes.

📉 Global Stock Market crash?

Indian markets are experiencing substantial corrections and maintaining a strong downtrend. Europe is beginning to pull back now after the STOXX 50 had a stellar start to the year, crossing over 10% growth year-to-date. It is now correcting.

Will this be the start of a long correction across all global markets, pulling everything down with it—from gold to Bitcoin to indexes? Probably…maybe…who really knows.

To me, the correction seemed healthy in the US and especially in India. There were very expensive pockets of frothy overvaluation, and such conditions never last long. That’s the issue with paying any price for growth; in a bull run, it can keep crawling higher and higher until euphoria bursts and those multiples compress significantly and rapidly. The environment is perfect for correction levels—how low is anyone’s guess—but I suspect we are beginning to see some pain across world markets.

What should you do? Take profits, diversify, and close uncertain long and short positions. Patiently wait for the dust to settle. I don’t think this is the best market to rapidly deploy cash; there will be time for that. Smart money saw this coming and rotated capital into other segments of the market—geographies with lower valuations like Argentina or China. Retail investors often catch on late.

Keep some cash ready (dry powder), and look for bargains and buying opportunities in oversold quality companies. I’m buying the weakness, starting with India. I’m focusing on buying the lows.

👀 Watch metrics and indicators closely…

Watch trailing P/E ratios. While not a great indicator for making financial decisions, when the P/E of an index is stretched, it tends to rerate whole indexes back to the average after moving lower. Index valuation indicates sentiment across the entire market.

With India, Foreign Institutional Investors (FII) have heavily sold off the index in favor of China and Asian equities, in addition to taking substantial profits from the last few years of India’s bull run.

This has now brought the Nifty 50 index back below a P/E of x20. The Nifty Mid Caps and Small Caps are another story altogether.

🩸 More Pain to come…

In today’s volatile markets, investor emotions run high. Many investors lock in losses, panic sell, or try to average down into losing positions, but sometimes doing nothing is the best strategy.

Timing the market is ineffective. For long-term investors, making lump-sum investments or dollar-cost averaging (DCA) into beaten-down indexes is often wise. Adding during major dips can further reduce your cost basis.

Trading can be too risky right now. While short positions and options can hedge portfolios, they carry significant risk during market fluctuations. It’s often smarter to be patient and observe.

Rather than trying to time the market bottom—a fool’s errand—wait for signs of recovery. The “late to the party” strategy works best; arriving a little late can help you enjoy the most rewarding parts of the market while minimising potential losses.

🎢 Volatility is at an all time high…

One thing I have noticed that is not usually the case is that volatility remains ridiculously high right now. The ASX earnings season has been the worst I’ve ever seen. Small misses are being punished massively, with stocks being oversold. Companies with no positive news are rising, while those that performed well but missed some expectations have been smashed down by 10-20%.

The market gyrations are exacerbated at the moment. Whole indexes are losing billions and then regaining that amount in the next day or two. The volatility in cryptocurrency is spreading into the stock market, causing similar swings in both directions.

There’s a lot of systematic investing, trading, and index rebalancing happening, which is impacting the markets. It’s important to ignore the news; every headline says it’s the worst drop since some date in the past.

Long-term investors don’t panic.

Patient investors don’t panic.

Experienced investors don’t panic.

Investors with strategies and plans don’t panic. If you’ve bought the right stocks, just sit tight.

📉 My small-cap fund is down around 4% year-to-date.

That’s not bad considering how choppy the world is right now. I am confident in the majority of my holdings. One company faced a major correction and dropped 27%. Looking at the thesis, it was a little shaky, but the long-term prospects, opportunities, and growth remain intact. Instead of expecting results by FY26, I’ve pushed the valuation price I expect out to FY27.

Should I have sold? No, I am patient and believe I brought right. I just need to extend my expectations; I was early to the party. The fundamentals have not changed, although earnings took a hit due to heavy investment in R&D and expansion into a new country.

If you know what you hold, you are better prepared to assess the volatility. They call it being directionally right. I don’t want to be wrong, and I’m not trying to be right 100% of the time; I just want to be directionally right.

This time will be different is not true.

Everything I am reading, seeing, watching, and hearing has the ring of “this time it will be different.” This suggests that the stock market will crash and stay down, the US dollar will fail, and a global economic recession will plunge the world into chaos.

I’ve heard it all before, and it won’t be different this time. Markets, capital, money, and economies are all cyclical in nature.

This is just another phase that will soon pass, as it always has and always will.

Corrections and bear markets are where long-term wealth is made. What you do during these downturns has a significant impact on your long-term compound annual growth rate (CAGR). I believe these times force you to examine your portfolio and rethink your strategy. Is it bulletproof? Have you accounted for downside risk?

One clear sign I am observing across markets is the presence of new retail investors who entered during the COVID period. This is their first correction and could potentially be their first bear market. Indian investors who started a few years ago have only experienced a bull market, and now panic is setting in.

As Mark Howard shares in his writings, downside protection and risk management are often overlooked. The only way to test risk management strategies is during periods of market uncertainty and corrections. Otherwise, you wouldn’t know if a strategy is effective unless it is under pressure.

⛓️‍💥 Testing your risk strategy…

If you are considering downside protection at this stage, it may be late, but it’s not too late. I expect markets around the world to remain volatile until clarity emerges regarding Trump and until valuations return to normal levels for many companies. There is also a significant threat to AI in the US from China, which will continue to be a factor throughout the year.

Wars need to settle, tariffs must be resolved, valuations require correction, and global threats and economic uncertainty must taper off. Once these factors are addressed, we may see some peace midway through the year.

Right now, you should only be investing with a clear strategy that includes downside protection and hedging—perhaps with a balanced multi-asset portfolio.

🤔 What I am doing?

I am doing what I always do: seeking opportunities, monitoring the markets, and considering where they might head next. I’m looking for catalysts and indicators that could signal a reversal.

I already have watchlists in place and am closely tracking companies I like, based on my research. I’m waiting for the right buying opportunities. This is a global endeavor, with no limits on geography.

I’m seeing potential in ASX small caps, Indian large caps, Japanese stocks, Hong Kong and Chinese equities, certain European companies, and several other segments.

I have strategies ready for down markets, such as trimming winners and moving to cash, which I can then deploy into a bear market. As the bull market has risen, I suggest profit-taking on companies reaching or exceeding their valuations. This capital will rotate back into undervalued, oversold, and neglected stocks, positioning for the next bull run.

🙅‍♂️ Currently, I have no exposure to cryptocurrencies, bonds, gold, or silver. I am instead focusing on cash or equities, waiting and observing.

This highlights the importance of maintaining a watchlist, having hunting grounds, and generating ideas throughout the year because there are always opportunities to buy quality assets at lower prices. This correction will be no different.

It’s certainly an interesting market right now, filled with engaging news and headlines. Buckle up; the ride is just beginning.