3 Things to do during Stock Market Correction

Every now and then, the stock market takes a breather. Prices fall, headlines turn gloomy, and fear takes center stage.

What you’re witnessing isn’t the end of the world — it’s a normal and temporary part of every business cycle.

Unfortunately, most investors react to corrections in all the wrong ways: they panic, sell good companies, or freeze up waiting for “more clarity.”

At MoneyWorks4Me, we suggest a simpler, more rational approach — built on three timeless steps:

1. Spot the Right Stocks
2. Know the Right Price
3. Buy the Right Amount to Diversify

Why Investors Panic When Stocks Are on Sale

When online stores announce a sale, shoppers rush to buy.

But when the stock market goes “on sale,” most people do the exact opposite — they panic and run away.

The biggest mistake investors make is judging a business by its share price instead of its fundamentals.

Buying a share means owning a small part of a business — not trading a lottery ticket.

During downturns, the loudest voices in the media are often short-term speculators, not business owners. Meanwhile, company managements — who understand their businesses best — quietly continue building value.

A market slowdown is like a speed breaker, not a crash. It slows the car for a bit, but it doesn’t mean the engine is broken.

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – Bill Gates

Corrections test your temperament more than your skill. The winners are those who can keep calm and think long term.

Why Investors Make Poor Decisions During Corrections

Here are a few common mistakes investors fall prey to — and how to fix them:

1. Anchoring Bias – “This stock is cheap because it’s at a 52-week low.”

A falling stock price doesn’t automatically make it undervalued. If the company’s fundamentals have deteriorated, the lower price could simply be fair value.
 Fix: Always value a company based on its business performance, not its past stock price.

2. Loss Aversion – “I’ll wait until it goes back to my purchase price.”

Investors hate booking losses, even when holding a mistake costs them more.

Fix: Accept small losses early and redeploy your money into stronger businesses. You don’t have to earn back money the same way you lost it.

3. Confirmation Bias – “Everyone says the economy is collapsing.”

We tend to believe news that supports our fears. But pessimistic headlines often ignore long-term fundamentals.

Fix: Look at hard data and business performance, not market noise.

4. Sampling Bias – “Small caps gave 30% returns last year — they must be best!”

Short-term data can be misleading. A few good years don’t make an asset class risk-free.

Fix: Evaluate performance across multiple cycles, not a single phase.

5. Regret Aversion – “I’ll wait for the market to fall a little more.”

Trying to time the exact bottom usually results in missing the rebound.

Fix: Invest gradually in quality stocks as they fall to attractive valuations.

3 Things to Do During Every Market Correction

1. Spot the Right Stocks

With over 5,000 listed companies, it’s tough to know which ones truly deserve your money.

That’s where the MoneyWorks4Me Color Code helps —

• Green means fundamentally strong and investable.
• Red means avoid.

This system filters out noise and keeps you focused on companies with long-term earning power.

2. Know the Right Price

Your buying price determines most of your eventual return. Even a great company can be a poor investment if bought too high.

At MoneyWorks4Me, we use two key prices:

• MRP (Maximum Retail Price): The fair value of a stock — the highest price you should pay.
• DP (Discounted Price): The ideal buy zone that gives you a margin of safety.
   

Buying closer to DP is like using a coupon code for better returns — it increases your long-term gains and reduces downside risk.

3. Buy the Right Amount to Diversify

No one knows which sector will outperform next. That’s why diversification matters.

By spreading your investments across at least 20 quality stocks, you reduce the impact of any single company or sector underperforming.

Diversification doesn’t mean owning everything. It means owning enough of the right things.

At MoneyWorks4Me, we recommend a focused yet balanced portfolio that can weather market corrections and compound steadily over time.

The Big Picture

A market correction is like a sale season for long-term investors — a chance to buy great businesses at discounted prices.

You wouldn’t refuse a Titan watch at 50% off; why hesitate when quality stocks are on sale?

Corrections are temporary. But the wealth created by disciplined investing lasts for decades.

Stay patient, stay diversified, and stay invested in great businesses.

Happy Investing!