“I’ll show you how to get rich. Shut the door. When others are greedy, I’ll be afraid. When others are fearful, I’ll be greedy.” – Warren Buffett
This Buffett quote is relevant today.
Investors fear bear markets. Their personal portfolios are already in a bear market. They fear the market will fall further and could wipe out their investments.
The biggest question on investors’ minds is what they should do in this situation.
Should you sell, take a loss and avoid this volatility?
That would be painful, but also bring some relief. However, the sell-off also poses the risk of missing out on a V-shaped recovery, as we saw in April 2020.
There is an option to partially sell your stake, but that won’t solve your dilemma, only reduce it. In this case, you also need to decide again how much to sell.
Persist what to do?
It’s more painful than selling because you’re likely to see more losses. A portfolio that is down 30% could be down 50% or more if you stick with stocks that are down.
Should you buy more?
There are many investors who have some money to invest. They can also choose to sell some shares and use the money to invest in other stocks.
There are others who missed the rally and are very interested in getting in now. If you buy now, you are effectively placing a call option on the entire market. In other words, you’ll want to recover quickly.
If that doesn’t happen, you’ll regret your decision to pull the trigger sooner. You also have to wait a while before your portfolio breaks even.
What is the best decision?
As you may have realized, there are no easy answers.
that’s right. There are no easy investment options in the Indian stock market today.
Uncertainty—interest rates, inflation, slowing growth, geopolitical changes—is simply too high. No one can predict what will happen next in the market.
However, one thing is clear. Bears have the upper hand in the short term. They seem to be in control these days. Nearly every session ended in a downtrend.
At the time of writing, the Nifty index is below the recent lows set in March 2022. Many large-cap stocks fell more than 15%. The broader mid-cap and small-cap markets fared worse. Some of these stocks have fallen 50% from their all-time highs.
But that doesn’t mean you can’t make money in Indian stocks. you can.
You just have to look in the right place.
Here’s our advice…
* If you’ve found a good stock with rock-solid fundamentals, and it’s fallen to a reasonable level, it’s time to put some money in. Take a partial exposure. If the market keeps falling, you can invest more.
* If you’re looking for stocks that tick the box for long-term investing, then you must read the following editorial – Looking for Consistent Compounding Stocks? This is your watchlist.
If you want to start from scratch, a good idea is to look for the most undervalued stocks on the market. This is a great place to start your search with a fresh mindset. Check out Equitymaster’s stock screener for the most undervalued stocks.
* If you own a stock with poor fundamentals or questionable…sell. They are not worth holding on to.
* If you have quality stocks in your portfolio, you can hold them. Pay close attention to their fundamentals.
* If you’re a trader, it’s best not to consider this volatility unless you want to make money by short selling.
These points should help you overcome some of your doubts about how to invest in the market today.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be considered a stock recommendation.
This article was co-published by Equitymaster.com
(This story has not been edited by NDTV staff and was automatically generated from the syndicated feed.)