Market corrections don’t just test portfolios; they test people.

In a bull market, everyone feels like a disciplined, long-term investor. Confidence is high, portfolios are growing, and the temptation to believe in one’s own investing skill is strong. But when the market corrects and prices fall, fear spreads and uncertainty take hold. That’s when your true investor identity is revealed.

Market corrections are more than just financial events; they are psychological tests. They expose whether your investment approach is built on solid principles or merely on the comfort of rising markets. They expose emotions, reveal biases, and show whether you’re truly committed to your financial strategy.

Are You a Long-Term Investor or a Short-Term Reactor?

A market correction is the perfect mirror. It forces you to confront the gap between what you say you believe and how you actually behave.

Market downturns force you to ask: Do I truly believe in my plan? Or was I only comfortable when things were easy?

Your reaction to a correction says everything about your mindset. Do you run from volatility, or do you embrace it as part of the journey?

Discipline Over Emotion

True investors stick to their strategy, no matter what the market is doing. That doesn’t mean ignoring reality. It means staying rational when others are losing their composure.

Corrections are temporary. History shows that markets recover, and those who stay invested almost always come out ahead. But if you let fear dictate your actions, you lock in losses and miss the recovery.

Your behaviour during a correction determines whether you’ll be looking back with regret or looking ahead with confidence.

The Market Doesn’t Just Test You—It Reveals You

It’s easy to believe you’re a disciplined investor when stocks are going up. A market correction forces you to look in the mirror. Are you really as patient, rational, and focused as you thought?

The truth is that market corrections don’t change who you are. They reveal who you’ve been all along.

When market volatility tests you, ask yourself: Who am I really? Then make sure your actions align with the answer you want to give.

Market volatility itself isn’t the problem. It’s how investors respond to it that leads to success or poor outcomes.

   “The desire to perform all the time is usually a barrier to performing over time.” – Robert Olstein

A correction will show whether your investing approach is truly strategic or simply reactive.

Which one will you be?

 

 

The above article was written and adapted by Marius Kilian.