You can get rich on a falling stock market – if you have the stomach for it

But history suggests that price drops on this sort of scale are rare and will in time deliver some fantastic rebounds. Markets over-react in both directions because, while share prices are determined in the long run by fundamentals, in the shorter term they can diverge far from them.

Investors were probably much too optimistic during the pandemic, in an environment of persistently low interest rates. And they are probably much too pessimistic today as growth slows and financial conditions tighten.

The case for contrarian investing is strong. Bubbles and panics are an unavoidable feature of stock markets. Deep-seated cognitive biases mean investors are particularly prone to major decision-making errors. We over-emphasize the importance of negative events, we extrapolate the recent past and we anchor on earlier price levels. We assign the wrong probabilities to events, suffer from over-confidence, are influenced by group dynamics and fall victim to the contagion of ideas. The list of our mental shortcomings as investors is endless.

And the consequence of the market’s overshoots is that a systematic contrarian approach, applied consistently over time, can deliver outperformance. Buying the cheapest stocks, whether measured against earnings, cashflow, book value or dividends will pay off in the long run. If we can find the stomach to do it. It’s a great deal easier to say it than to do it.

So, I don’t know whether Pinterest (down 52pc), Under Armor (off 57pc), Peloton (76pc down) and Crocs (68pc below its peak) will turn out to be good investments. I suspect that some will and some won’t. But I would be very surprised if the anxiety seeping through the rest of the market this week has not already been well and truly priced into a basket of the most friendless stocks.

Tom Stevenson is an investment director at Fidelity International. The views are his own.