Fear, oil shocks and volatility: Why investor behavior matters more than ever

The old investing adage, “you get what you deserve, not what you want”, is worth revisiting in the context of today’s volatile market environment. This insight, popularised by investment writer Morgan Housel, in an address to #IndiaInvConf a few years back (whose video is available on YouTube), isn’t just philosophical, it’s practical.

In essence, it reminds investors that markets don’t cater to expectations; they reward discipline and behaviour that withstands uncertainty. Housel is a former columnist at the Motley Fool and the Wall Street Journal.

1. Emotional Investing vs. Market Reality

Indian indices have been sharply impacted by geopolitical tensions in the Middle East. Major indices such as the Nifty and Sensex plunged as risk appetite evaporated and crude prices surged pushing stock prices down and prompting fear-driven selling.This is exactly the kind of environment where behaviour trumps forecast. Investors often want reassurance that markets will be stable and upward-bound, but the market’s behaviour, driven by oil price shocks and geopolitical risk, doesn’t care about those wishes. What matters is whether investors stick to a well-thought plan or panic and sell at the lows.

2. Risk Perception: Personal vs. Market

Housel explains that risk is perceived differently by each investor and this personal bias often leads to poor timing decisions.

In the current environment, risk isn’t just theoretical, rising crude prices, a weakening rupee, and nervous foreign flows (FIIs) are real forces affecting valuations. Investors who desire certainty may sell impulsively during volatility, but successful outcomes come from understanding risk and planning for it.3. Behavioural Discipline Matters More Than Prediction

Predicting where markets go next is nearly impossible, especially in times of geopolitical upheaval like now. Indian markets saw sharp sell-offs driven by fear rather than fundamentals, and many traders were caught off guard by the swift moves.

This underscores Housel’s point: behaviour, not prediction, dictates investing success. Sticking to asset allocation, maintaining a margin of safety, and resisting panic-selling are behaviours that produce lasting returns, even when short-term results disappoint.

4. Long-Term Compounding vs. Short-Term Noise

Another key idea is the power of compounding, returns accrue significantly over time as long as you stay invested.

Amid today’s volatility, where headlines are dominated by crashes and geopolitical risk, it’s tempting to believe that the market has permanently changed. But markets historically recover and reward patient, calm investors over the long term. Getting “what you deserve” means weathering the downturn without abandoning your strategy.

5. The Broader Market Context in March 2026

To understand why behaviour matters now, look at what’s driving sentiment:

Markets are trading sideways to cautious amid geopolitical tensions.
Crude oil concerns are spiking inflation and risk aversion.
External factors like AI-tech sell-offs and foreign selling pressures add to volatility.

These forces create unpredictable price movements, not necessarily based on fundamentals but on emotional and macro drivers.

What You Deserve in Investing Today

In today’s stock market turmoil, markets won’t rise just because investors want them to. They respond to fundamentals, risk, and collective behaviour.

Investors who resist emotional reactions, focus on long-term strategy and manage risk realistically are the ones likely to be rewarded over time.

Those chasing quick gains, timing the market, or reacting to headlines will often get what they want, fear and losses, not what they deserve: long-term compounded returns.