What to do in such turbulent times?

Posted on October 14, 2008
Filed Under Investment Guide, Market News & Discussions, Todays Market |

The stock market is a see-saw these days. Plummeting 900 points on one day and growing 700+ points on the next. What does this imply? Simply- Nothing can be guaranteed and anything can happen. That’s easy to say but hard to accept when you have your life’s savings at stake and when your stocks are in deep dark red sinking more than 50%. Here are some guidelines which may help you to get out safely from the current turbulent Indian stock market scenario.

1. Indian Economy is strong. When you invest in stocks of Indian companies, you invest in their business, and to know whether really your investment is endangered you should check whether the business of the companies you invest in is endangered or not. And currently for most of the companies it’s not! So chill!

This single point is enough for some potential investors to breathe easy, but for others here are some points.

2. If your investments are drastically down by, say greater than, 30%, then do fundamental analysis on the stocks you have, if their business is still good with good future cash flows, BUY MORE! Yes, they are on sale. But if you do this, be prepared to see some more downside and wait patiently for at least 2 months.

3. If your investments are down by 1%-30% - keep a close watch on those companies which are down the most and follow the same strategy I told above. For other stocks, hold – don’t buy don’t sell. Keep the cash with you.

4. If your investments are in profit by 0-10%- book profits. But don’t take entire cash out. As nothing can be said about the future. It’s better to be safe. As many legends say, don’t try to time the market.

5. If your investments are in nice profit..like above 20%, why are u even reading this??

Try to hedge your investments. If you had read this post about gold a month back you must have invested in it after some analysis, which may have proved a boon right now. Remember, fundamental analysis is crucial at this point. If you can’t do it, hire someone! Do not speculate in such times.

 

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