I remember during my childhood days when I mistakenly ate a fruit seed, one of my friends told me that a tree would grow in my stomach and I will have to carry that for rest of my life. It was a scary thought and it left me restless for the rest of the week.

Doomsday predictions about the markets or the world in general are similar, where the ‘experts’ predict the end of the world scenario which would lead to destruction of entire financial world. Let’s look at some of the doomsday predictions of history and how world moved passed that.

Doomsday Predictions of History:

  1. The Bible calls 666 the number of the Beast. Many Christians in Europe feared that the end of the world will be year 1666. The Great London Fire destroyed much of the city, during that time. Many say that this fire was a fulfilment of the end of the world prophecy.
  2. 21 Dec 2012, marked the end of the first “Great Cycle” of the Maya Long Count calendar. Many interpreted it as an absolute end to the calendar, which tracked time for 5,125 years. Doomsday predictions emerged. End-of-the-world scenarios predicted that the Earth will collide with an imaginary planet called Nibiru. But here we are in 2025.
  3. I remember during 2008 when crude oil prices touched $140 per barrel, one of the market experts predicted $250 price for crude in future and incidentally during covid when crude prices went below $40 per barrel, the same market expert predicted $20 price for crude in future. We now know both scenarios did not take place.
  4. Recent doomsday predictions on GST implementation and its impact on economy, demonetization, IL& FS crisis, Corona Virus crisis all of which impacted the markets temporarily but all the market experts predicted extreme scenarios for all these events.
  5. I was lucky enough to visit Berkshire Hathway AGM during April 2022. Someone asked Warren Buffett, what if the current Ukraine-Russia war escalated and became a nuclear war, what would happen to Berkshire share price, as Berkshire would have large insurance liabilities as a result of nuclear war. Buffett discussed the question in detail, where he emphasized that if the nuclear war takes place, it would indeed create huge liability for Berkshire but if there is nuclear war, Berkshire share price would be least of your concerns.

Why the Doomsday predictions come true:

Even a broken clock shows correct time twice in a day. Similarly, if we hear doomsday predictions every year, one of the years it would come true. There will always be a “what if” when we are investing, because as seen in earlier section there will always be some doomsday prediction for that year.

How to Handle Doomsday predictions

As we know that someday the Doomsday prediction is going to come true. Then how do we handle these situations?

  1. One way to handle the situation is to stay on side-lines and wait for the prediction to come true and then invest. This strategy looks good but it’s difficult to implement. Because the doomsday scenario is going to come true once in a while (may be in a decade) and you may have wait for a long time to invest. Secondly when the scenario comes, you may not have stomach to invest or you may think about waiting for more correction.
  2. Liquidating the investments because of doomsday predictions, can be injurious to wealth, because you would end up doing so every year for some or the other prediction.
  3. For long term investors when Doomsday predictions come true, it becomes opportunity to invest more.
  4. For SIP investors, the monthly investment accumulates assets at lower rates during large corrections, making future returns attractive.
  5. The asset allocation plays critical role to navigate through these situations and helps to create long term wealth.

We have learned from history that we never learn from history. Don’t let the doomsday predictions distort your wealth creation journey, rather use these situations as an opportunity to create wealth.