Been there. Done that.

Not too many people understand the importance of staying calm. The year was 1992. Markets were going up in a tizzy. This client had bought 20,000 shares of Mazda Leasing (aka Mazda Industries) for Rs. 11. He had no clue why he had bought it. In fact I had bought it for him. He never objected to my doing anything to his portfolio – I ad full, total liberty.

So he asked what price will it go? I said ‘It is a speculative shit, so we will sell every rise above Rs 50. So sold of say 200 shares at 58 – the first time I sold any share at all. Then I sold 200 at 116. Now I said I will increase the stake – sold 1000 at 200. His cost was recovered. He was happy having recovered his costs…but to cut a long story short sold off 8000 at 1200.

Price went up more – we had completely sold off by 1300. End of story.

Sold a lot for many clients in 1992 – we knew there was a guy named Harshad, but did not know his colossal impact. Sold a lot of scrips because we felt that the pe was not sustainable – nothing to do with the sensex.

Other than such dizzying heights, I rarely react to the markets. I react to bad results or client needing money for a particular goal that was planned earlier. In fact my dialog with the client goes like this:

  • if you are not going to go out of the market permanently do not sell when the markets are low
  • actually you should be buying not selling when the markets are down
  • if your goals are far away, keep investing, not divesting
  • the best time to invest is when you have money. Best time to sell is when you need money.
  • markets will do what it has to do. You should do what you have to do.
  • In uncertain markets pundits tell you cash is king
  • In uncertain times, best place to keep your money is a good index fund, NOT CASH.
  • Have adequate insurance – most emergency requirements are medical emergency
  • if you want to fool around with equity, why are you coming to ME?

READ ON – been there done that…i have been in the thick of bear market, and in the thick of the bull market – and not recognised them correctly. However, there has been a lot of learning from the markets…

read on if you want to know what some others say

http://www.behaviorgap.com/attention-blunt-advice-scary-markets-drill-sergeant/

 

 

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  1. lakshminarasimman

    sir 2 gem statements you made. thank you very much

    the best time to invest is when you have money. Best time to sell is when you need money.
    markets will do what it has to do. You should do what you have to do.

  2. Dear Sir,

    When you say “dizzying heights”, you mean PE ratios in what range ? I am in the market only for the last 3-4 years, so haven’t seen such market madness yet.
    Will be helpful if you can share such info from your exp.

    Thanks,
    Gouri

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