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How To Convert A Slump In Markets Into Profitable Investment

 

After the sharp fall in global markets overnight am sure many retail investors are right now sitting in deep losses or trying to cut their position by selling off the investment at whatever rate possible. Well you might be surprised but you are bracing yourself for way bigger losses going forward.

Well you might ask, what is one supposed to do then in this scenario? My answer is stay calm, don’t panic and make this the biggest buying opportunity ever. Let’s face one basic fact, markets will get into cyclical ups and downs but individual investors needn’t rally worry about that.

Here is a short 5-point guideline on what you should do when the markets are in free fall mode:

  • Set long-term Investment Targets: Unless you are a day trader, don’t get into day to day trades. The wise choice would be to opt for a long-term target for your investment and keep an eye on the bigger picture.
  • Don’t Press The Panic Button: Do not get into a herd behaviour mode and don’t concentrate on what others are doing. So what if markets are falling, take a holistic view of your investment and asses the likely prospects going forward.
  • Look For Economic Indicators: Whenever you are investing in the market, take the economic indicators like customer spending index, inflation and other data as the yardstick to gauge the overall mood and future investment outlook
  • Look At Value Buys: Am sure you have heard of terms like cherry picking and bottom fishing, it is your time to do the same in the markets. Instead of getting into panic mode and selling at a loss, look for value buys at bargain rates and insure future gains.
  • Make An Informed Choice: Don’t buy a stock because a friend or a neighbour suggested. Do proper research and due diligence before committing your cash.

Therefore despite the sharp and record fall in markets, it is not the time for Indian investors to panic. Take out your fishing net and start accumulating blue-chips at a bargain. The economy is showing clear signs of improvement, inflation is on the decline, oil prices have stabilised and the RBI seems moderately optimistic. Therefore look beyond these knee jerk reactions and train your gun on bigger gains.

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