Don't try to catch a falling knife

Markets are seeing a meaningful correction first time since 2018. Mind you covid and post covid, income inequality has only become worse with masses becoming poorer when taking inflation into perspective. We saw a consumption boom post covid, however this seems to have just turned out to be a pent up demand, or revenge shopping. The saving rates among Indians are at all time low. The economic growth have been more or less a jobless growth with salaries stagnant among various sectors for almost 2 decades now. At start of 2018, BSE small cap index was at around 18000, and in a span of just 8 years surged to 54000 i.e. 3x gain. That is annual compounded growth of 14.7% !!!! It has somewhat settled to around 47000, however that also translates to an annual compounded growth of 12.7%. Many new investors or speculators have not seen a bear market. Our economy is hardly growing at 6%, and taking inflation of 5 - 6% in account, the nominal growth is no more than 11%. On a long term basis, stock markets mirror economic growth and keeping this into account small cap index should have been around 40,000 - 42,000. So there may be still more pain ahead. Generally in a prolonged bear market, it lags the actual economic growth. Hence markets have crashed somewhat, but they can crash a lot more. So don't try to catch a falling knife. Stay safe, stay wise and all the best.