The fear center in your brain, can respond to danger in a very short time – one-25th the time it takes to blink your eye. These brain cells fire when an attack dog snarls at you, you lose balance on a cycle in the middle of the road, or the Equity markets dive.

Your brain is your biggest investing enemy – says Jason Zewig in his book. A book that I have read and reviewed in the past. Today I am trying to tell you how to handle the fear. Like they say fear is real, panic is optional. All of us get scared – and success is achieved by conquering fear, not by pretending that it is not there at all. Fear has a terrible impact on the markets. Remember October 2002 plunge? It had an impact on India too! Those who pulled out of the US markets missed the Bull run of  2003 to 2007. Ditto for those who lost money in the Technology meltdown – they missed the steepest curve ever in Indian markets!

So here are some tips – I am not sure where I got them from, but I have used it well!

  1. Staying invested through a bull market is just as scary as staying invested through a bear market. Constant worries about ‘what if everything goes to zero’ is not an easy feeling to live with. Accept that such feelings will happen. A good first step.
  2. I do think that staying invested, growing the fund, putting more money into it for the past 37 years has been a great achievement. I have seen so many people drop by the wayside or drop their equity portion to a small single digit number.
  3. Maintain an investment diary, it helps control emotions and reading back on how you felt during the tough times helps.
  4. When the market goes from 28000 to say 60,000 in say 3 years do not say “I wish I had invested in 2016” see how shit scared were you in 2016 – stop fooling yourself that you can invest when everybody is selling. Easy to say, impossible to do.
  5. When the market goes up or down – look at your whole portfolio, the impact is not much. I have Cholamandalam Investment and Finance – so on the day of the demonetization, I obviously saw Chola, Equitas and Asian Paints plunge. However, some other shares – like CARE was up! Overall impact on portfolio? Not much.
  6. Look at the portfolio drop as an amazing opportunity to buy good stuff at a lower price – why crib? buy. I was a buyer on 9 Nov, because I had a list ready. YOU do not panic when you see the fall as a great opportunity. Forget what you paid for that share; instead, imagine it was free. Now that it is priced, say, 20% more cheaply than last month, should you want to return the gift? Or should you buy more while it is on sale?
  7. Mark it to scale – reassess the damage in your whole net worth. Say you have a net worth of Rs. 10 crores and you also have a great house to live in. Does a Rs. 30L fall in your portfolio really matter?
  8. If you have already started maintaining a diary..see how you felt – and see what prices the same shares were available! When Chola plunged from 300 to 65..of course I felt I should have sold off all my shares at 300 (had sold partially) – but I went and bought more shares of Chola. Watched it go down to 43 – and at the quantities I had, I was staring at a big hole. Luckily I stuck on. Today the share price is Rs. 1100  – or thereabouts.
  9. Step outside yourself – how would it be if a friend or a client were to look at your portfolio TODAY and come to a conclusion. Tough for you, but easy for people like me who watch so many portfolios. However, it is possible to do this. Like a soul leaving the body – do it regularly.
  10. Forgiving others is good, but forgiving your mistakes is CENTRAL to a continued journey in equities. FORGIVE YOURSELF and see under what circumstances you took the decision – you might end up laughing !!
  11. Control your urge to do ‘something’. Remember the Goal keeper strategy in mind. Relax.


more to go…later..

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