The current market is seeing high volatility. The Budget has not helped it. But even while the market is crashing, I am seeing the investors’ sentiments ie retail investors like you and me, more confident than it was during the earlier crash -ie Harshad Mehta’s. I used to be in Mumbai those days. The investors took a long time to come back to the market and so there was enough room for the impending investors to get into the market and time was plenty as well!
But this time around the investors are mostly knowledgeable and more researched, so in a way I am going to call it a matured market. It is not Intellectuals market as yet, we are far from it. I am sure this is a time for contemplation for most of us. We see the market swing extremely. What to do? How to go about it?
Following these simple rules may see you through these tough times and emerge a winner when the market rebounds, which it sure will. Only time is the unknown factor here.
so,
Never look for short term gains during these times. This means your investment holding should look for at least 2-3 years from now.
Don’t panic and sell at dips. Learn to average your cost. Buy the same stock at each dips and try to average your cost. Dividends, bonuses and other benefits also average your cost. My experience has been to buy ex-dividend and ex-bonus and wait for the next cycle. I have found the yields are better.
Look for fundamentally strong and established companies and invest.
Remember, bulls are waiting around the corner somewhere(only we cant see and do not know the time), so do not wait too long for the dips. There may be no bottom seen at any levels. So staggered buying should be your mantra.
Dont buy on impulse or on hearsay. Do your research. I believe well advised and researched investments hold the key to any investment. Equity being the more sensitive.
Those of you, who are putting their hard earned money into Equity, do so cautiously. Caution tells us that only 10-15% of your portfolio should be in equity in this case.
Similalry, donot put all your eggs in the same basket. Try to buy in different sectors, different industries and so on, but stick to the basic principle of fundamentally good stocks.
For those in the more risk taking class and age, investing in penny stock of such fundamentally good companies will yield good returns with a longer time horizon and tons of patience.
You may see tremendous pain in the process. But the returns are worth it, like REC and Powergrid. You may do the equity research there and arrive at your conclusion.
- Divide your investments amongst different classes of investments. The choice is yours where to invest ranging from gold etfs to NSCs to PPF to real estate. Your Risk chart should dictate.
and Finally
- Set your goal and enter. Goals, of course, depend on many factors unique to each individual. Take help at each stage.
10.Monitor your investments regularly.
These set of guidelines may help you to take limited exposure to the market without much frost bites into your assets.
There is no good time to enter and no bad time to exit! These are actually What we call the Bulls and Bears of the market!
I will write more, but much depends on the response to this brief write up.