What to Do When Markets Fall
Peter McGahan
Monday 23rd March, 2026.
I DO flinch with turbulence in a flight, then remind myself what it is. The day the market falls is the day your phone suddenly thinks it's a newsroom. Every headline wants a gasp, and every ‘pundit’ wants you to believe this time is different. My Director of Investment and I know from all our years of this experience - it rarely is.
Yes, we understand fluctuations and how they can serve you or not, but as always, the calm pilot understands turbulence for what it is. So, assuming you receive investment advice from a qualified person and the portfolio is correct (qualified pilot and plane), consider these facts.
Here are the supporting facts. JP Morgan’s own analysis, using S&P 500 Total Return data to February 28, 2025, found that a fully invested approach delivered about 10.6 per cent a year over the prior 20 years. Miss just the 10 best days and the return dropped to about 6.37 per cent. Miss 30 best days and you were down around 1.53 per cent. Those numbers are not a promise, and past performance is never a guarantee - but they are a very clear warning label on the idea of “getting out until things feel safer”. (Think plane!)
The detail which matters most is the one almost nobody remembers when they are panicking: the best days and the worst days tend to arrive together. Over that same 20-year period, seven of the 10 best days occurred within 15 days of one of the 10 worst days. In other words, if you sell because you cannot bear the down days, you are very likely to miss the bounce that often follows - because it shows up in the middle of the storm, not when the sky looks blue again.
That is the first reason you should not follow market falls or headline noise. It is not just that timing is hard. It is that the maths punishes you for trying.
The second reason is that these drops are normal. Corrections - a fall of around 10 per cent from a recent high - are a regular feature of markets, not a special event. On average, a correction takes about five months to move from peak to trough and about four months to recover. Again, not a guarantee - but it is a reminder that markets often heal while the news is still shouting.
When markets fall, we assume the sensible thing is to “do something”. The trouble is that doing something often means doing the wrong thing at the wrong time.
DALBAR’s latest Quantitative Analysis of Investor Behaviour makes the point with painful clarity. In 2024, the average equity investor earned 16.54 per cent, while the S&P 500 returned 25.02 per cent - an 8.48 percentage point gap in a single year. DALBAR attributes that gap to behaviour: buying after rises, selling after falls, and generally letting emotion set the timetable.
You do not improve your flight by unbuckling because the seatbelt sign came on. You improve it by having a plan and knowledge before the turbulence starts and sticking to it while it lasts.
In practice, that means building a simple system that makes good behaviour easier than bad behaviour.
Regular investing - over time you smooth it out, perhaps buying more in weaknesses precisely the opposite if the investors above.
Rebalancing, a disciplined way of trimming what has run ahead and topping up what has fallen behind - not because you “know” what happens next, but because you are keeping risk aligned with your plan. The logic is supported by decades of research showing that asset allocation - how you split between major asset classes - explains a large share of the variation in returns over time.
And the final part is the simplest, and often the hardest: stop treating headlines as instructions. Checking your portfolio every day is like weighing yourself every hour - you will see movement, but you will not see meaning. Review in years, not weeks. Make changes when your goals, timeframe, or capacity for loss changes - not when a TV presenter raises their ‘voice’.
The evidence is not telling you to ignore risk. It is telling you to ignore noise. Markets fall. That is normal. The costly mistake is letting the fall persuade you to abandon the very thing you were investing for in the first place, assuming you have received the correct investment advice.
This article is for general information only and is not personal financial advice.
We are writing a guide to investment, if you would like a complimentary copy, please email info@wwfp.net or call 01872 222422.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser firm, Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
