The market is seen a lot of panic selling and the MSM is screaming “markets back to pre Modi levels” and other stuff. There is a very good chance that you will panic and sell. The same paper will scream and say “if you had done a sip in Reliance Growth scheme over 10 years…your money would have grown 30 times” or some shit like that. What prevents you from continuing the SIP? THE ARTICLES like the ones which talks about how it is risky to be in equities…and other such shit.

What are the important things during a market fall?

  1. RISK MANAGEMENT: risk of course means different things for different people. If you needed money next week or next month or next year THAT MONEY should not have been in equities anyway. If it is or was, bad luck, just withdraw and pray that the markets remain low till you invest the money back into the equity markets. Risk means different things for different people. So just in case you do not understand the risk in your portfolio, read this. If you have a bad portfolio of equity mutual funds or stocks, this may not be a great time to do a clearance sale. As long as you do not have to worry about the TOTAL corpus, do not bother.
  2. There is space for good shares, and bonds in YOUR portfolio. I am not naming too many shares, but if you see hard the shares of Hdfc, Hdfc bank, Cholamandalam Investments, Kotak bank, etc. have not taken a beating the way SBI, Icici, Union Bank..etc. have. All the hammering will surely create value for the investors, be alert and be willing to spot the good opportunities.
  3. Whose advice do you take: If  you have an activity seeking broker to him it will not matter what is your goal. So he/she may suggest a sell on SBI at 175 to do a buy back at 170. In my view a volatile market makes it very difficult for a novice trader to make money. Personally I doubt whether there will be enough margins to sell, buy, sell again…so be careful about such ‘active’ strategies.
  4. How much of meditation you have done: to stay relaxed in a rising market or a falling market is not easy. Just too much noise distracts you. Some of us have gone through all this and can now relax. Honestly, this comes from an attitude (meditation is attitude). So saying – I believe in my research, and I do not need my money now – have to be the ‘chanting mantras’. If you are not confident about your research, and do not have the ability to sit still, you surely have a problem. You should NOT be in equities – direct or mutual funds.

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  1. Dear Mr.Subra,
    In this panic stricken environment, when investments in the last year has given about -10% returns, what is your opinion on “tax loss harvesting” – to book short term capital loss and shift to comparable funds (for example Franklin Templeton Blue Chip to FT Prima plus, ICICI Pru Discovery to ICICI Pru midcap) or booking loss in stocks and re-investing? Will come in handy at a later date when a STCG is made, isn’t it?

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