"Investor wealth eroded by Rs. 11.42 lakh Crore!"


An 'Eye Ball' catching headline that has most people worried about notional losses on their Investments and left them wondering about the best course of action in these circumstances. Most people would be swinging between any of the following reactions:
  • "Hey the markets are volatile and it's better to stay away till the dust of volatility settles down, so let me redeem my investments and stop my losses!"
or

  • "Hey the markets are down! let me buy some fresh stock to average out my portfolio!"

As each one of us becomes a self designated expert on the market dynamics and gets into  discussions on "what happened and for how long this will take to recover", it might be worthwhile to ponder over the reasons behind this.

Though the markets are temperamental and have no particular reason to go up or down, a few factors that caused this carnage would be WHO(World Health Organization) declaring COVID 19 as a pandemic causing panic across the globe. With businesses being affected, this certainly is an important factor contributing to the downfall and may take some time to phase out. Add to this the Delay in US stimulus and the climbing crude prices with a related currency downgrade, and we have a perfect case for more volatility in the coming days.

So what should an Investor do? Knowing reasons for this carnage is important but knowing what needs to be done decides the future of his investments. 

In this scenario, the best course of action that one could take would be:
  1. When Fear is high and news is negative, it's time to buy.  However it may be wise to stagger and buy. 
  2. For those who are looking for long term investments, stick on. What goes down would surely go up too!
  3. Continue to invest towards goals that would keep the cycle of fear and greed away.
  4. Continue the SIP(systematic Investment Plans) and at any cost do not stop them.
The pain of seeing one's investments erode is intense but remember this loss is just notional! The markets may go up or down but the disciplined and patient investor would surely find his pot of gold at the end of the rainbow!

Cheers to the Informed Investor!

Anupama Bhargava CFP 

Comments

  1. Good article awarding current market scenario and strategies to be followed

    ReplyDelete
  2. Yes. Good way of looking at markets. An opportunity to buy or hold tight.

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  3. Very nice presentation on current scenario. It is the right time to invest rather to withdraw

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  4. I always go with your thoughts mam, no doubt the market scenario now creating the biggest opportunity to invest rather to redeem.
    Love to read more from you.

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  5. Very well and concisely articulated. Captures of what one must do in these troubled waters. Would love to read the follow up posts and take cue on the direction one should follow.

    ReplyDelete

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