The stock markets nowadays are like a roller coaster ride. One day, news about a possible tariff hurting Indian businesses brings the markets down, while on another, markets bounce back when there is no confirmation of those fears coming true. So it is like this nearly every day now.
The record-high portfolio values from just a couple of months ago appear to be a dream now.
The natural human instinct is to sell off your investments and get out of the markets with as much profit as you can. News about investors pausing their SIPs in record numbers is doing the rounds, highlighting investors' panic.
Here are five key guidelines for approaching markets :
1. Remind yourself why you invested in the stock market: All intelligent investing is long-term investing:
You would have invested in the stock market for long-term goals and not short-term profits. Most of our subscribers are like you and are long-term-oriented. So, if it is long-term returns you are after, you should not sell in short-term volatility.
2. Consider the business cycles of your investments: Even if you have invested for a shorter time horizon, remember that companies operate their businesses not on the stock exchanges but in the real world, which is more complex and linked to incomes, savings, purchases, and surpluses. That is a longer time cycle than a one- or two-year timeframe. To make money in stocks, you need to give your investments time to grow.
3. Think of locked-in FDs or even your Provident Fund when considering how long you should remain invested: Pick a quality company when they are not too expensive and hold on to them like they're locked in. Don't give yourself the option to click "SELL" whenever the markets overreact. The markets will recover, and so will your stocks if you continue to hold on.
4. Keep an eye out for opportunities to invest: It is in times like these, when markets panic, that some very good companies begin to trade at attractive levels. Keep an eye out for high-quality companies that may fall more than they deserve. How would you know that? When the stock price falls, it has more to do with the markets than the company itself.
5. Turn off the business news channels: Finally, don't let scary headlines like "bloodbath on the streets", "Markets in mayhem", or "Investors lose Rs 9 lakh crores" give you cause for worry. These business media thrive on creating panic and are always short-sighted. Recall the money you have made in very long-term investments. That is how long you make money in stocks by remaining invested.
3. Think of locked-in FDs or even your Provident Fund when considering how long you should remain invested: Pick a quality company when they are not too expensive and hold on to them like they're locked in. Don't give yourself the option to click "SELL" whenever the markets overreact. The markets will recover, and so will your stocks if you continue to hold on.
4. Keep an eye out for opportunities to invest: It is in times like these, when markets panic, that some very good companies begin to trade at attractive levels. Keep an eye out for high-quality companies that may fall more than they deserve. How would you know that? When the stock price falls, it has more to do with the markets than the company itself.
5. Turn off the business news channels: Finally, don't let scary headlines like "bloodbath on the streets", "Markets in mayhem", or "Investors lose Rs 9 lakh crores" give you cause for worry. These business media thrive on creating panic and are always short-sighted. Recall the money you have made in very long-term investments. That is how long you make money in stocks by remaining invested.
