The common man who reacts to the media sharks normally misses the sharpest fall, and many a times the sharpest rise too.

So typically he will read the papers today (Monday morning) and react on Monday (25th Aug) right up to say 10th Sept. So the market which came down from about 27000 to 25500 – and that is not a very big fall.

The semi-brave ones will look for a chance to invest at 25,500, but may not be ready for another 1000 point fall followed by a 1000 point meltdown.

The brave ones will be ready for a further fall. I bought yesterday with a willingness to hold a falling knife. Yes I know somewhere I can go wrong…but I just executed an already thought of trade. I just went ahead with the purchase, and did not postpone. Yes I bought 1/3rd of what Quantity i wanted, leaving some cash on the table.

I remember when the index was 11000 on the way down I called 9k as the bottom, but many technical analysts (including bear king Shankar Sharma) called 6k. My take was I would be a buyer at 9k, 8k and 6k. Market turned at about 8k..and I had no clue when it would touch 21k – the previous high. IT DID NOT MATTER.

If I call it right, I have to be able to get all the following right:

  • how far it will go down – 25k, 23k, or 20k (no point in giving a vague number, EXACT NUMBER)
  • how long will it remain there (exactly so that I can buy a few days before it goes up again)
  • how fast it will move up and till where (If it goes down to 21k and remains there for a month and goes up to 27k and again goes to 24k…I should get all that right)
  • till what time it will remain at the top.

Sadly none of us know that so:

Shankar Sharma will say..there will be pain, markets are doomed, you can see only downside, markets will NEVER go up.

Rakesh Jhunjhunwala will say the market has done a technical correction, it will recover in 5  weeks – the bull market is on.

Prashant Jain, Naren Sankaran, Balasubramaniam,  – the mutual fund industry in general will say “keep your SIP going, this is just temporary. Remember if you are remunerated on the basis of the aum, and not on the basis of performance, you will do your job as a gatherer.

Brokerage firms will all claim that they can time the market. God bless them. Some of them can, and that is the problem.

Frankly my advice would be simple – if you have the cash keep it in a liquid fund. Invest 1/3 rd and keep the balance in the liquid fund. If the market goes down another 5% put in the next 1/3rd. The next money should come into the market only IF THERE is a further 10%fall.

If you are a mutual fund SIP investor, keep the good work going…

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  1. waiting over a year with 50% cash though SIP going as normal.. Finally its here… Acha Din aaayaa… horray, started the shopping as yourself sir. 🙂

  2. Yes sir, the ticker movement and non stop commentary encourage inappropriate decisions by the common man. Your message is clear, KIND and correct.

    I am 100 % going to follow what you have said

  3. Hilarious Shinu!!Exactly one year ago, the market was at 26.4K and you felt overvalued and you waited. Now the market is at 26K and you feel happy at shopping.

    I guess innumeracy at its best.

  4. yes santy, a return of over 8% i made on my cash was defenitely a better option than in market which stayed where it is exactly a year after… learn not to loose money before you learn how to make money.. 😉

  5. @Shinu – you are assuming it will go up from now onward? it may be at 20k next year this time 🙂
    – In long run would it matter if you had invested last year or today?

  6. Since I started reading this post I had a question in my mind asking what should on do with the existing SIP’s, and the answer is one line which is last line 🙂

  7. @ Ravi.. i will be delighted if it go down as exactly subra sir put it. but i was just not comfortable to put MORE money than my regular sip above 25k last year or 26k aug 2015…

  8. I am keeping my SIPs going. Thanks for the guidance Subra Sir. But also buying small amounts apart from SIP just to cash in on the fall.

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