'You shouldn't own stocks…', says Peter Lynch if not ready for stock market crash — Here's why

Stock market crash: The US-Iran war has emerged as the latest headache for stock market investors as all equity markets are taking a beating amid the rising energy prices and unabated Middle East tensions.

Crude prices have topped the $100 mark today, rising to the highest level in four years. Against this backdrop, the Indian stock market has crashed 3%. Meanwhile, some of its Asian peers faced an even bleaker fate. South Korea's high-flying market fell 8.2%, having already shed more than 10% last week. Meanwhile, Japanese markets shed 7%. China, another big oil importer, saw its benchmark index decline 1.7%.

Both sides appear to be digging in for a potentially lengthy conflict. Iran on Monday named the son of the late Ayatollah Ali Khamenei as its new supreme leader, while President Donald Trump said higher oil prices were a very small price to pay” for “safety and peace.”

Investors were seen scrambling for cover amid the global turmoil, worried about how long the ongoing stock selloff would last.

Against this backdrop, an old video of legendary investor Peter Lynch is making rounds on the social media platform X (formerly Twitter), where he is seen suggesting that investors should not consider market declines as an exception but as part and parcel of investing.

Drawing lessons from history, Lynch argues that investors should not fear market volatility; instead, he believes it is a good opportunity to double down on their preferred investments.

Don't own stocks if...

Looking at nearly a century of market data, Lynch highlighted a simple reality: stock markets fall frequently. Over the past 93 years, markets have witnessed around 50 declines of 10% or more. "We call that a correction. That's a euphemism for losing a lot of money rapidly," Lynch was seen saying in a video from 1999.

Even deeper declines occur periodically. Of those 50 corrections, about 15 have turned into full-fledged bear markets — defined as declines of 25% or more. That means investors can expect a major downturn roughly once every six years.

For Lynch, the takeaway is: investors must accept that markets will fall from time to time. He said that anybody not ready to brace for such stock market crashes should refrain from investing in stocks.

Opportunity, not a threat

However, he sees market declines as opportunities rather than threats. If an investor likes a stock at $14 and the price falls to $6 while the company’s fundamentals remain intact, the situation may actually improve the investment case. If the long-term target remains $22, the potential return becomes even more attractive when buying at the lower price, Lynch said as an example.

“So you take advantage of these declines. They're going to happen. No one knows when they're going to happen,” Lynch said.

The key, according to Lynch, is understanding what you own. Investors who have studied a company’s business, balance sheet and long-term prospects are better positioned to remain confident during market turbulence. Those who buy stocks without conviction are more likely to panic during downturns.

Don't rush!

Lynch also cautioned against the urgency many investors feel when buying stocks. In his view, there is usually plenty of time to invest in a good company.

He points to Walmart as a classic example. The retail giant went public in 1970 after already demonstrating strong performance and maintaining a solid balance sheet. Even investors who waited a decade after the IPO could have generated extraordinary returns — more than 30 times their initial investment. Those who invested at the time of listing made even more, with gains approaching 500 times their money.

The lesson, Lynch suggests, is clear: patience and discipline matter more than timing the market.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.