What a terrible time it is for investors around the world – US stocks are down 16%, European stocks are down 14% and Chinese stocks are down 15%. In Ghana, stocks are down 8% after almost holding steady for the first 4 months of the year. To make matters worse, inflation of almost 24% has made holding bonds and treasuries unattractive and this has reflected in the government unable to meet its borrowing targets on the local market.

A major reason for the global asset rout is inflation. The Great Recession ushered in a period of easy money policy from central banks. They purchased bonds and other assets on the market thus flushing the financial system with liquidity and driving borrowing costs to zero. With this easy money investors moved into stocks, emerging market bonds, private equity and digital assets, creating one of the most impressive run of returns we will see in our lifetime. But now inflation has returned, and central banks are raising interest rates in a bid to tackle it. This has forced investors to reappraise the valuations of assets on the market and prices are falling as economic pessimism replaces the unbridled optimism of the last decade.

This post though is not about what is causing the market rout. It’s about how not to panic in a market in which everything seems to be losing money. The good years following the Great Recession have created an expectation among investors that the market is a wealth creation machine. But that has only been the case for very few people and even then, several of them have not been able to replicate the large successes they initially achieved. What the market is (and this is going to sound very disappointing) is a wealth storing machine. It is the means by which we protect our hard-earned money from the decaying effect of inflation.

The market is the place where through a careful and patient allocation, we can ensure that the purchasing power of our savings can be maintained over our lifespan. And this means periods of losses are not supposed to change our investment plan just the same way periods of gains are not supposed to make us overambitious. Global markets are in retreat, almost every investor is going to take a loss and failing to accept that could prove more costly as it could push you into risky investments or have you sitting on only cash for so long that you miss out on rallies.

There is no guarantee that things will remain so bad in the market. But then, accepting losses and focusing on a long-term, diversified portfolio will serve you just as well if the market was to recover or to further decline. Because if there is one thing worse than the fear of missing out (FOMO), it’s the desire to recover losses.