Corrections often smolder under the surface, but a true bottom isn't reached until a major, headline-grabbing event causes even the highest-quality stocks and indices to sell off sharply. This 'capitulation' signals the final phase of the downturn is at hand.

The best moments to buy are created by widespread fear and bad news, making you instinctively not want to. A great investor isn't someone who is unafraid during these times; they are someone who acts rationally despite the overwhelming emotional pressure to sell or stay on the sidelines.

History shows that markets can remain irrational longer than investors can remain solvent. For instance, the Nasdaq was 40% higher at its post-crash low in 2002 than when media first called the dot-com market "nutty" in 1995. Selling too early, even with sound analysis, often means missing substantial gains.

During a crisis, avoid the temptation to trade based on predictions of how events will unfold. Instead, use the market volatility to purchase pre-identified, resilient companies at better prices, accelerating your existing strategy rather than creating a reactive new one.

After COVID and the Russia-Ukraine war, equity markets have been conditioned to price in recovery and move on from geopolitical or health crises much faster than fixed-income or commodity markets, which tend to dwell on the negative impacts for longer.

The best times to invest, like market bottoms during a crisis, often coincide with peak personal financial instability, such as job loss. This makes the common advice to "buy the dip" or "hold on" practically impossible for many, beyond just behavioral challenges.

Analyzing past disruptions (newspapers, tobacco), stock prices didn't recover until downward earnings revisions ceased. For investors in today's AI-threatened software sector, the key buy signal is not a low price but the stabilization of forward earnings estimates, which may take multiple quarters to appear.

A key sign of a market bottom is when the sell-off expands beyond speculative assets and significantly impacts the 'best stocks' and major indices. This final phase of capitulation is often triggered by a major external shock, like a war, indicating the correction is nearly complete.

Unlike market tops which form over extended periods, market bottoms often occur rapidly after a final capitulation event. Investors should anticipate this speed and be ready to deploy capital during periods of peak negative sentiment, as the recovery can begin just as quickly.