Seriously I do not have an answer to that. I never had. I am not convinced that you NEED TO INVEST NOW. Having said that if you are doing an SIP it is time to keep investing – there is nothing to say that the markets have peaked and it will fall.

However, if you are a long term investor, staying out of the market at this point in time will not kill your overall returns. I have been buying (and selling) shares like Cholamandalam, Coro International, LMW, Wendt, – which means I am not deploying new money into the markets. When you are faced with such a situation, you are reminded of what Bernstein says in his book

“It is a fact that, from time to time, the markets and investing public go barking mad.  Of course, the madness is obvious only in retrospect.  But a study of previous manias and crashes will give you at least a fighting chance of recognizing when asset prices have become absurdly expensive and risky and when the have become too depressed and cheap to pass up.  The simplest way of separating managers who would be suckered into the dot-com mania from those who would not would be to administer a brief quiz on the 1929 crash….”

Well, ‘Devil takes the Hindmost’ is a good book to read and Amit Trivedi has made it kind of simple by compiling many of the crashes if not all in his book “Riding the Roller Coaster” – so both these books are a good place to start when the indices are at the upper end. I am waiting for the EARNINGS to catch up with the indices – though logic says cash should wait in the banks and not in the market. Be that as it may what is scary is the absence of the retail investor in the Indian market. All of them have invested / are investing through the SIP route. This is good, but also creates a niche market in which you as an individual can invest.

Look at those shares which a fund manager cannot buy or will not buy. Well managed companies which do not have too much volumes, but are good enough for you as an individual to buy. I remember Rane Madras as one of those shares with very poor volumes. Ditto Bosch. MRF. LMW. Even Eicher.

So this is a good time to search for the nuggets which have not run up too vulgarly. Maybe add more shares. Maybe sit on the sidelines. Sitting tight over long periods of time when the cash is rotting in the current account is not easy. What do you do? Maybe repay loans? sit on cash? Furnish the house? sell some shares and buy that 600mm Canon lens? after all the market is allowing you some luxuries – and if you do not use YOUR own profits for YOUR own indulgences, why ride the Roller Coaster?

Remember the market is not a Roller Coaster – the Roller Coaster has a fixed pattern, starts and ends at the same place, gives you a very strong safety belt, has a lot of safety elements built in.

The markets do not have a fixed pattern, has no safety belts, can leave you dizzy at the top and make you look stupid in a week’s time, but do remember that changes like a 40% fall happen once in 50 years. However you can age 50 years worrying about the 40% fall. Why 40%? in 1929 it fell 80%.

Read history, if nothing, it is interesting.

PS: shares mentioned in this article are just random examples. I may/may not have these shares. I may even have call or put options on the same. I am not duty bound to tell you what I have in my portfolio. The only thing I am recommending here is Karma Yogi Amit Trivedi’s Roller Coaster book.

I wear many hats from day trader to deep value investing, and my father’s portfolio has some shares bought before I was born. That is deep value long term.

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  1. Hi Subra,

    What will be your advice to the people who sold complete portfolio after demonitisation and sitting on cash like fools watching the fantastic bull run thereafter ? Obviously I am one among them …

  2. I have heard of Amit Trivedi’s Roller Coaster book. My father recommended me the same. He read the review in a Gujarati magazine.
    Can you suggest some book to understand how investment in SIP!

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