Cash Is Oxygen

16.02.26 08:48 AM - By Surabhi Kalia

Why corrections reward prepared investors 

Markets don’t move in straight lines. Corrections are a part of how markets function. Yet investor reactions to corrections are wildly different.

  • Some wait calmly.
  • Some freeze.
  • Some panic.
The difference is not intelligence. It’s liquidity.

Cash is oxygen

Warren Buffett once remarked that cash is like oxygen — you don’t notice it when it’s there, but you notice it desperately when it’s not.

In investing, cash doesn’t exist to earn returns. It exists to keep you alive and functional during stress.

This is where the difference between SIP and lumpsum investing quietly emerges.

The hidden advantage of SIP investors and how it's lost over time

SIP investors have a built-in advantage - fresh capital keeps flowing in. Every market dip becomes usable. Every correction is met with deployment, not anxiety. Early in the investing journey, this creates a natural resilience.  
The investor doesn’t need to decide to act — the system acts for them.
Once Annual SIP to Portfolio ratio falls to around 0.25, their ability to materially influence outcomes during corrections begins to weaken. At that point, even a SIP portfolio begins to behave like a lumpsum portfolio during corrections as the monthly inflow is no longer enough to materially improve average cost. 
This is the stage many long-term investors fail to recognize. This is the point which requires a review of deployment and creating a Debt component.

Why lumpsum investors experience corrections differently

A fully deployed lumpsum portfolio has no such buffer. When markets fall:

  • There is nothing left to deploy

  • Losses feel permanent

  • Fear replaces conviction

This is why corrections are emotionally harder for lumpsum investors — not because they are wrong, but because they are capital-exhausted. 

For a Lumpsum investor, a 20-25% Debt to Portfolio ratio can help to take advantage of Market volatility without compromising returns in the long run.

Debt is not a drag — it’s a safety net

Think of investing like climbing a ladder. When you’re close to the ground, a small net is enough. As you climb higher, the same net becomes meaningless unless repositioned. Debt plays this role. Not to predict corrections. Not to time the market. But to preserve the ability to act when volatility inevitably arrives. 

This is how seasoned investors think. Naive investors fear corrections because they are fully committed and immobile. Prepared investors wait for corrections because they are liquid and ready.

The Real Lesson

SIP and lumpsum investing are tools. Liquidity management is the strategy.

Markets will always correct. The only question is whether an investor meets corrections with fear — or with oxygen.


"Returns come from staying invested.
Resilience comes from staying deployable."

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Surabhi Kalia

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