Faiz Memon of Fidelis Wealth Management
- Don’t panic. Run of the mill 10% corrections are more regular than we like to remember. Mostly because they still feel visceral and we would rather forget.
- It's a counter-intuitive, but a falling market is the absolute worst time to take any rushed decisions about "protecting" investments.
- If you have an asset allocation structure in place, now is when it works.
- Even if you have cash on hand, don't try to catch a falling knife. The stock market and the economy are separate things. Do not confuse a stock market correction with a recession in the real economy.
- Always remember that investing in equity must be for the long haul. There are too many punters playing short term and that is where they lose. If your equity investment horizon is sub-10 years, you have a problem.
- Make a shopping list. Stocks will be on sale. Know what you want to buy, why you will buy it, and the ideal price at which you will do so.
(These views were shared over email)
Shankar Sharma of First Global
I am absolutely clear in that this is not a 2008 repeat. This is nothing but a normal correction of a vastly overbought equity market globally. And this also marks the start of a massive relative bull market in Emerging Markets vs Global Equities. Yaad rakhna...
(These views were shared on Twitter)
Basant Maheshwari of Basant Maheshwari Wealth Advisers
What you buy is more important than when you buy. So, it’s not a question of whether you buy 10% down or 10% up. Vakrangee, the poster boy of this bull market, is already down 50%, and it went up 20-30 times over the last 3-5 years. So, 10% high or low makes no difference if there is no exit. Buy high quality companies. Because when the bear comes up along, you will be safe behind quality. Buy companies with strong fundamentals. It sounds clichéd, but it is all the more important in a time like this.
Don’t buy small caps. It is very difficult to find an exit there and money is not created by making 10-20% gains, money is created by buying stocks for 5, 7 and 10 years. Focus on large caps and mid caps with more than $1 billion of market cap.
Look at stocks backed by earnings and growth, and quality management.
(These views were shared in an interview with ET Now)
Vishal Khandelwal of Safal Niveshak
Predicting the subsequent movement of stock prices, or the next mood swing of Mr. Market, whether he will be in the best of his spirits or worst – is a loser’s game.
Focusing on where the earnings and cash flows of the underlying businesses you own, or want to own, are going to go long term is what you must focus on.
Your behaviour and expectations are under your control, and so is the amount of risk you wish to take and the time you have in hand. Stock prices and future returns aren’t under your control and thus you must leave them at what they do best, that is, fluctuate.
“If owning stocks is a long-term project for you,” warns psychologist Daniel Kahneman, “following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.”
(These views are taken from a post authored by him)
