When Financial Plan meets Panic

While planning, we acknowledge that markets are irrational in the short run. So we create a set of principles like not checking the portfolio too often, letting compounding do its work, and staying long-term focused. These principles reflect years of accumulated wisdom, ours and that of our advisors. In those moments, we are calm, grounded, and clear. We know exactly what to do.

But then war breaks out, the market falls and the portfolio is down 15–20%.

Suddenly, a different version of us shows up.

We all display our own signs of panic. Mine are familiar. I start checking my portfolio and my clients’ portfolios multiple times a day. I switch on business channels. I follow the expert of the day. I read every bearish headline with a sinking feeling. Slowly, I begin constructing rational-sounding arguments for why this time is different, and eventually, I convince myself that everything is about to come crashing down. Even outside finance, things change. I start speaking more in Hindi or Punjabi, and those who know me will understand what that usually signals.

Now, before we dismiss this second version of ourselves as irrational, it’s important to understand something. It isn’t. In fact, it is frighteningly articulate. It builds arguments so persuasive that the calm, principled version of us struggles to respond.

This is the second self. And every investor I’ve met, read about, or worked with carries both of these selves within them.

The first self creates the investment plan in moments of peace and clarity. The second self has to live with that plan when the world feels like it’s on fire. And the uncomfortable truth is that they are almost different people. The first self makes promises the second self cannot always keep, not because it is weak or undisciplined, but because it is operating under entirely different conditions.

In investing, we talk a lot about having a process and strong principles. What we talk about far less is that having a process and being able to follow it under pressure are two completely different skills. The first is intellectual. The second is emotional. And it is naive to believe we will remain perfectly undisturbed, unmoved by fear, or immune to uncertainty.

I used to read about great investors like Warren Buffett and Charlie Munger and think this level of temperament was something to admire from a distance. I no longer think that. I now see it as a precise description of the gap most investors and advisors spend their entire careers trying, and often failing, to close.

Nobody can teach us how to bridge this gap. It has to be earned slowly by observing ourselves honestly across multiple market cycles, until we understand our second self well enough to recognize it when it arrives.

All of us panic at some point. The goal is not to eliminate panic or become fearless, but to understand fear deeply enough that when it shows up, it does not overpower clarity. We need to identify its signs. I’ve shared mine. You need to discover yours.

At R&D Capital, we try to build a simple but practical layer into this. When markets fall and the urge to act becomes strong, we take a pause. Not to avoid action, but to create space between impulse and decision. In that space, we speak to our sounding board before making any move. Often, that one conversation is enough to separate fear-driven reactions from process-driven decisions.