How do smart investors react to panic?
Is staying calm your biggest advantage?

Here’s your calm guide to chaos. Let’s get into it.

This week, global markets dropped sharply after Trump’s tariff announcements.

Investors are nervous, and for good reason.
Higher trade barriers often mean slower business, lower profits, and more uncertainty.

But even before this, my 18-year-old brother had already gotten a taste of what volatility feels like.

He recently opened his first investing account (a PEA 🇫🇷) and bought a global index ETF with €250. He does have more savings, but kept the amount small on purpose. His main goals are to travel in the next few years and maybe buy a motorcycle (🥲).

The goal here is to learn, not to take huge risks with short-term savings.

Then he got an email from his broker: his investment was down 10%.

He wasn’t panicked, but it definitely made him pause. It’s one thing to know that markets go up and down. It’s another to feel it with your own money.

That drop did what it was supposed to do: it gave him experience. A chance to learn what volatility really feels like, without putting his savings at risk.

He stayed calm this time, but the stakes were low.
What if he had invested more? Would the outcome have been the same?

The Urge to "Do Something"

When markets drop, our brains are wired to respond.
"My life savings are disappearing, I need to do something!"

We can’t help but think that this is it. The next big financial crisis.
So we convince ourselves we should sell now, before it gets worse.

In today’s edition, I want to take a step back and zoom out a little. When markets drop, it’s easy to panic or second-guess your choices. But that’s exactly when it helps to remember why you invested in the first place.

So let’s take a step back and look at FTSE All-World Index over the past 25 years.
I chose this index because it gives a broad, global view. It includes +4,000 of the world’s biggest companies across nearly 50 countries have performed.

The first trend we can notice, is that markets have always recovered over the long term, no matter the crisis. While we can't guarantee future markets will behave the same way, this historical resilience is worth noting.

By the way, this is also why many investors appreciate index funds. Some individual companies didn't survive these crises, and if you had owned those shares directly, you might not have recovered your investment.

With an index, you're automatically invested across many companies, which helps protect you from single-company failures.

(If this has you thinking about index investing, feel free to check out my free course. It covers all the essential knowledge a beginner needs 🙂)

What happened in the four circles we see above ?

*How long it took for the performance to return to its previous peak level 
(not just stop falling, but fully recover all losses.)

The second trend worth noting is that recovery times vary dramatically:
7 years, 6 years, 7 months, 2 years.

No one can predict exactly how long a downturn will last before markets bounce back. That’s why it’s so important to pick investments that match your goals, your time horizon, and how much risk you’re actually comfortable taking.

Let’s say I’m investing in a global index ETF for my retirement, which is still 40 years away. If the market crashes tomorrow, sure it’s not fun to see red numbers, but I wouldn’t lose sleep over it. I’ve got decades ahead of me, and history shows markets tend to recover over time.

Now, imagine I was investing that same money but planning to use it in three years for a down payment on a home. That’s a whole different story. A market crash could mean I have to delay my plans, or worse, settle for less, because I might not have time to recover the losses. In that case, investing in stocks probably wasn’t the right tool for the job to begin with.

So please, be intentional when choosing how much to invest where. Ask yourself:
- Why are you investing?
- For how long?
- Which solutions best match your goals and risk comfort?

That's also what financial advisors can help with if you're looking for professional guidance.

What Can Fear Indicators Tell Us?

When markets drop, emotions often take the wheel.
That’s where “fear gauges” come in, they help us measure how nervous investors are.

The VSTOXX (for European markets) and VIX (for US markets) act like emotional thermometers for the market.

• Under 18: Markets are calm.

• 18-28: Nervousness is creeping in.

• Above 28: Real fear, often leading to panic selling.

So why should you care?

Because when the news is loud and your portfolio is down, it’s hard to think straight. Seeing that the VIX or VSTOXX is spiking tells you:
“Okay, I’m not alone. Everyone’s freaking out.”
That context matters.

It reminds you that market drops are often driven by fear of what might happen next.

Knowing that gives you space to pause and ask:
“Are my goals still the same? Has my timeline changed?”
If the answer is no, then maybe the best move is to stay put.

In fact, according to this study by Morningstar researchers, investors who focus on their financial needs and avoid emotional panic selling could gain an additional 17-23% in total assets over a decade. 
That’s the power of keeping a cool head when fear takes over.

Is there a “right” way to react to market drops?

Markets will always go up and down. Volatility is part of investing.
That’s why it’s so important to build an investment approach that matches your situation, your goals, and your timeline.

The best thing you can do is prepare in advance. Set your own rules before a downturn hits, so when volatility shows up, you’re not scrambling to make a decision in the moment. You already know how you’ll respond.

And if you haven’t started investing yet because it feels overwhelming, try starting with a small “learning budget.” Even €100 can give you skin in the game and help you learn far more than reading ever could.

Many people delay getting started because they think they need thousands of euros or need to be experts. But you learn by doing, and small steps count.

I hope this newsletter helped you feel more confident navigating market ups and downs. If you think someone else would benefit from reading this, feel free to forward it.

And as always, I’m just a reply away if you have questions or feedback, I read every response 🙂

Take care,
Nessrine

Disclaimer: This newsletter is for educational purposes only, not financial advice. Always do your own research before investing. Remember that with any market investment, including ETFs, your capital is at risk and can decrease in value during market downturns.