Note: This article discusses Indonesian financial products and markets. The principles apply globally, though specific products, regulations, and tax treatments vary by country.

IHSG Is Down — Should I Wait?

“The market is down, better wait, right?” This question comes up every time IHSG (Indeks Harga Saham Gabungan / Indonesia Composite Index) corrects. It sounds logical — why buy now if it could be cheaper tomorrow?

But this logic hides a big trap.

The “Wait Until It Stabilizes” Trap

Problem #1: When is “stable”?

When IHSG drops 10%, you think: “Let’s wait.” Then it drops 15%, you think: “Good thing I didn’t buy yet.” Then it drops 20%, you think: “It could drop more.”

Then IHSG rises 5% from the bottom. You think: “This is just a dead cat bounce, wait more.” Up 10%: “Already too expensive.” Up 20%: “I missed it.”

There’s no clear signal when the market is “safe.” Because the market is never truly “safe” — there’s always uncertainty.

Problem #2: The best days happen during crises

Here’s a surprising fact: the days with the biggest gains in the stock market happen right around the days with the biggest losses.

Data from global markets shows:

• If you miss the 10 best days in 20 years, your return could be cut in half
• Most of the best days occur within weeks of the worst days
• You can’t get the best days without being present during the worst days

Problem #3: Waiting = market timing

Deciding to wait is a form of market timing — trying to predict short-term market direction. Research shows that market timing consistently fails, even for professional investment managers.

What Does the Data Say?

The investor who always invests at the “worst time”

There’s a classic simulation: imagine the unluckiest investor in the world — they always invest right before a major market drop. They invested right before the 1998 crisis, right before 2008, right before 2020.

The result? In the long term (20+ years), even the unluckiest investor still profits, as long as they don’t sell when the market drops and continue to invest regularly.

Time in the market > timing the market

Historical IHSG Recovery: The Pattern Repeats

Let’s look at real historical data from major IHSG declines and their recoveries:

*Recovery time = time for IHSG to surpass the previous peak and stay above it.

Pattern observed:

• Severe crises (>50% decline) take several years to fully recover
• Moderate corrections (20-40%) typically recover within 6-18 months
• In ALL cases, the market eventually exceeded previous highs

Important note: Past recovery doesn’t guarantee future recovery at the same speed. But it shows the historical resilience of equity markets.

The Cost of Sitting on Cash

When you decide to “wait,” your money sits idle. What’s the opportunity cost?

Assume you have Rp 10 million to invest:

Scenario A: Invest immediately

• IHSG is at 7,000
• Market drops 20% to 5,600 over 3 months
• Your Rp 10 million becomes Rp 8 million (paper loss)
• Market recovers to 7,700 over the next 12 months (+10% above starting point)
• Final value: Rp 11 million

Scenario B: Wait for “stability”

• You wait 3 months while market drops to 5,600
• You decide “it might drop more,” wait another 3 months
• Market recovers to 6,500
• You finally invest at 6,500 (feeling it’s “safer”)
• Market continues to 7,700
• Final value: Rp 11.85 million (better!)

But in reality (Scenario C):

• You wait 3 months (market at 5,600)
• You think “good thing I waited”
• You wait another 3 months and market jumps to 6,800
• Now you think “it’s too expensive, wait for correction”
• Market continues to 7,700
• You’re still holding cash while market is up 10%
• Final value: Rp 10 million (0% return)

Scenario B only works if you actually invest at the bottom. Most people who wait continue waiting through the recovery.

Behavioral Finance: Why We Make These Mistakes

Several psychological biases cause investors to make poor decisions during market declines:

1. Anchoring Bias We “anchor” to recent peak prices. If IHSG was 7,000 and is now 5,600, we feel it’s “too cheap” and expect it to fall more, or we wait for it to return to 7,000 before investing. The recent peak becomes our reference point, even though it’s irrelevant to future performance.

2. Confirmation Bias When you’ve decided to wait, you unconsciously look for news and opinions that confirm waiting is smart. You ignore the contrarian voices saying “this is a buying opportunity.”

3. Herding Behavior When everyone around you is panicking and selling, it feels safer to do the same. Buying when others are fearful requires going against the herd — which is psychologically difficult.

4. Regret Aversion We fear the regret of investing today and seeing the market drop tomorrow MORE than we fear the regret of missing the recovery. So we choose inaction.

Warren Buffett’s famous advice: “Be fearful when others are greedy, and greedy when others are fearful.” This is psychologically difficult to execute.

”But What If It Drops Even More?”

Yes, it could. No one knows. And that’s exactly the point.

If you invest regularly (DCA — Dollar Cost Averaging):

• When the market drops → You buy more units at cheaper prices
• When the market rises → The units you already own increase in value

Market drops benefit long-term investors who are still in the accumulation phase. Also learn about overcoming investment fears and Indonesian stock market risks.

Simple Analogy

Imagine you buy rice every month. If the price of rice drops, do you stop buying? Of course not — you’re happy because you get more.

Stocks are no different. If you believe that in the long term the economy will grow (and history shows this is true), then cheap prices are opportunities.

When Does “Waiting” Make Sense?

There are some situations where delaying investment can be justified:

1. You don’t have an emergency fund yet. Prioritize this first.
2. You have high-interest debt (credit cards, online loans). Pay it off first.
3. You’ll need the money in 1-2 years. This money isn’t suitable for stocks, whether the market is down or not.

But “the market is down” is not a valid reason to wait.

The Psychology Behind Wanting to Wait

Loss Aversion

Humans feel losses 2x more painfully than gains. Buying and seeing your portfolio drop 10% feels far worse than not buying and seeing the market rise 10%.

Recency Bias

We tend to assume recent conditions will continue. The market dropped this week → our brain thinks it will keep dropping. But there’s no connection.

Illusion of Control

Waiting gives the illusion that we’re in control of the situation. But we’re just delaying a decision without additional useful information.

What Should You Do?

If You Haven’t Started Investing Yet

Start now. No need to go all-in — start with a small amount you’re comfortable with. Rp 100,000 per month is fine too. What matters is starting.

If You’re Already Investing Regularly

Keep going. Don’t stop regular investing just because the market is down. This is when you get a “discount.”

If You Have a Lump Sum

If unsure, divide it into portions and invest gradually over 3-6 months. This may not be the optimal strategy mathematically (see the lump sum vs DCA article), but it can help psychologically.

Questions to Ask Yourself

Before deciding to wait, ask:

1. What am I waiting for? If the answer isn’t specific (“until it stabilizes,” “until it’s safe”), then you don’t have a plan — you’re just delaying.
2. What signal would make me want to start? If there’s no clear signal, you might never start.
3. Would I still invest if the market was already up 20%? If yes, why not invest now when prices are cheaper?

Summary

The best time to plant a tree was 20 years ago. The second best time is now.

The same applies to investing.

Disclaimer: This article is for education only, not investment advice.

Related Articles

• Dollar Cost Averaging: Myths and Reality
• Lump Sum vs DCA: Which Investment Strategy is Better?
• Overcoming Investment Fears: A Psychological Guide
• Stock Market Risks and How to Manage Them
• Index Funds: Complete Guide for Passive Investors