An old video of legendary investor Peter Lynch has resurfaced on social media platform X at a time when global stock markets are again witnessing bouts of sharp volatility. Though recorded years ago, Lynch’s message feels strikingly relevant for investors grappling with market crashes, corrections and sudden sell-offs.
Lynch, who famously ran Fidelity’s Magellan Fund, urges investors to first understand history before reacting to falling markets. His central argument is simple yet powerful: market declines are not rare events — they are inevitable.
Looking at nearly a century of market history, Lynch points out that in 93 years, markets have witnessed about 50 declines of 10% or more. That translates to a correction roughly once every two years. Of these, around 15 declines were deeper — 25% or more — what investors call bear markets. In other words, every six years on average, markets suffer a significant crash.
“That’s all you need to know,” Lynch says. If an investor is not mentally prepared for such declines, they should reconsider owning equities altogether.
Market crash an opportunity
Rather than fearing crashes, Lynch argues investors should welcome them — provided they understand the businesses they own. A falling stock price, he says, does not automatically mean a deteriorating company. If the balance sheet is strong and fundamentals remain intact, lower prices simply offer a better entry point.
“If you like a stock at 14 and it goes to 6, that’s great,” Lynch explains. The long-term payoff improves dramatically. A move from 14 to 22 may be “terrific,” but 6 to 22 is “exceptional.” Market crashes, therefore, create opportunities for long-term investors to buy quality companies at bargain prices.
Another crucial lesson Lynch highlights is the futility of market timing. No one can consistently predict when a crash will occur. Those who claim to have predicted downturns often made the same prediction dozens of times before being right once. Instead of trying to outguess the market, Lynch advises investors to stay focused on what they own and why they own it.
Patience, according to Lynch, is equally important. He uses Walmart as a classic example. Even if an investor had waited a full decade after Walmart went public — watching its expansion and business model play out — they could still have made over 30 times their investment. While early investors earned far more, the example shows there is ample time to build wealth without rushing into stocks.
The takeaway from Lynch’s message is clear: stock market crashes are not signals to panic, but reminders of how markets work. For investors who understand businesses, remain patient and embrace volatility, downturns can be among the most rewarding moments in an investing journey.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
