We all love certainty, do we not?

We hate uncertainty.

Till about 10 days ago we loved the certainty and we embraced risk. Or so we thought. We were happy. God was in heaven. Narendra Modi in Delhi, and all was well with the world. We saw the Index at 28,000…then 30k…then 33k…and it was heading towards 50k. Wow. World was good.

We assumed that things can go ONLY right. Then the PnB fraud case came to light. None of us of course understood what happened (I still have not) but the market started selling off bank shares, Bankex, and even the Nifty. Well the index came down from 36000 to 33000.

WHEN THE INDEX FALLS, RISK REDUCES, DOES NOT INCREASE!!

However, we panicked. We sold off Tata Steel (we justified by saying we had to pay for the rights), but hey the 730 Tata Steel was suddenly available at 650. Ditto for many shares. Ditto for all PSU bank shares, but Hdfc bank did not fall…God bless.

Yes when there was uncertainty, WE shunned risk. Oops we shunned buying.

We should have bought more, BUT OUR PERCEPTION of risk changed. Actually when you buy at a lower price, RISK REDUCES.

However, now we were sure that SBI would come down to Rs. 200 and PNB would just disappear? We panicked and called our adviser to ask him “should we stop our sip”? Poor chap he parrotted what the industry told him “never discontinue the SIP”.

So ask yourself…..are you feeling certain today? Well it is a day to avoid buying. When you feel scared, worried, and afraid, it is a great time to be buying.

Avoid comfort and certainty – that is a good time to sell (if you want)

When there is uncertainty, buy.