Investment Lessons from Present Equity Market

With Continuous fall in equity market and bearish tone for the coming months, many investors now have following thoughts.

1) Ruing the inaction by not selling their portfolio or part of it when FII’s started continuously selling from Apr’21 or especially from Otc’21 when the selling increased (Nifty reversed from 18,604 reached on 19 Oct’21).
2) Why did they fall in the Trap of continue to Buy Dips and invest all their money and now nothing left to buy further.
3) What do now…with Market already down almost 20% from Top with many individual stocks now at 1-2 year Low or even some going below Covid Rates of Mar’20
4) Why did they follow their friends or any group or the Telegram channels without knowing the people and their knowledge level.

Well every Problem or Crisis gives two things – Lessons and Opportunity. So, if you feel you cannot buy at the present level and missing the opportunities, then you need to again hardwire the Golden Rule lesson of Investment in your mind & heart as you are bound to face similar situation in future:–

a. Buffet Golden Rule – It is wise for investors to be “fearful when others are greedy, and greedy when others are fearful”. This contrarian has stood the test of its time for decades because Prices typically boil over when Investors become too greedy and over pay for an asset leading to anemic returns. Since the price is what you pay, and value is what you get, paying too high a price can decimate returns as in long term the asset returns to its intrinsic value.

b. Regular Periodic Investments and Avoiding timing the market always gives you more than average returns as you continue to buy at all prices over a period of time which reduces the cost of acquisition. It’s impossible to time the market – sell at high and buy at low, as nobody has ever perfected this Art of Buying & Selling.

c. Asset Allocation in Debt & Equity and maintaining sufficient liquidity for your immediate requirements is key to help you in preventing losses in your Investments. Many Investors especially in market scenarios like now are forced to sell their best performing stocks to meet their current financial obligations.

d. For all those Investors (especially the DIY) who invest on Tips without any research, Equity Market is not a Gambling Arena where only Luck matters. It’s your hard-earned money and don’t put it on the block without proper knowledge as it is painful to lose it and even more painful to earn those back. Take proper research advise and invest or best is to leave the investments in hands of those who are authorized and regulated (like Mutual Funds) instead of doing it on your own.

So take Lessons and keep practicing the same because Market Tide may turn for good or worse anytime but a Investor who follow the principles of Investments, will always reap the benefit of Equity as no matter what happens, Equity has and will always give the best returns in long term over all other asset class.

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