Usually, they reduce their exposure to risk assets like equity when down trend is fully established.
Expecting investors to increase risk in their portfolio at that time is akin to expecting a patient lying in ICU to worry about the sale in neighborhood grocery store.
The investors whose risk tolerance was breached by the fall would have exited their positions and therefore there losses would have become permanent in nature.
Statistically, if we eliminate the fall in March and April of 2020 and subsequent V-shaped recovery and assume a market in ad continuum, Nifty is up about 26% from the pre-Covid high recorded in January 2020.
Banks, realty, FMCG and services are all underperforming Nifty if we consider data from pre-Covid .
The point I am trying to raise is that the investors must cut the noise out and focus on their investment strategy, which must be in full consonance with their aptitude and risk appetite.