How to read a bad day on the markets without panicking

A 2% fall in a day makes headlines because in points it looks enormous, but it is statistically ordinary: it happens several times a year, every year. A 10% drop from the peak happens roughly once a year; a 20% one every few years. None of the three is exceptional.

The fastest way to restore proportion: look at the move as a percentage rather than in cash, and over a year rather than over a day. The same day that looks like a disaster on today's app often isn't even visible on a one-year chart.

If everything falls together — indices across continents, different sectors — it is a systemic move: something changed in expectations about rates, inflation or growth. It concerns the price of everything, and says nothing about the individual companies you own.

If instead one thing falls while the rest holds, then the question is specific and it is worth understanding what happened to it. That is the difference between "the market changed its mood" and "this company has a problem", and the two are not handled the same way.

Substance changes rarely: a company losing its market, a sector becoming obsolete, a country changing the rules. It does not change because a figure came in worse than expected, or because a headline sounds alarming.

And one practical rule worth more than any analysis: don't make portfolio decisions while markets are open on the day of the fall. If a week later the decision still looks right, then perhaps it is. It almost never still does.