Fear: Can be controlled in the market…

It was fairly obvious that say 10,000 years ago there were many groups in the forest – hunting. Obviously some brave groups which went and took on the animals head on, and some groups which were ‘shit’ scared.

Obviously the brave group…died!! the coward group procreated. You know to which we all belong. So it is fair that we get scared of whatever we see. Do you do bungee jumping? Okay if you have done, how many times did you check whether the ropes were well tied? How many times did you ask “is this safe”? That explains?

Well there is a part of the brain called amygdala – which responds to fear. It acts much much faster than what it takes for your eye to blink. Fairly obvious for us this is well developed. For generations our ancestors lived because of this response time. So whether it is a dog barking at you or a lizard falling on you..we react – yes faster than you can bat an eyelid.

Now what happens when we hear the words “market crash”. It surely makes us scared. If you are a new comer it can flare your nostrils, quicken your breath, flare your nostrils,….as if you are about to charge ON SOMEBODY…but you have no clue on who!

Now take this case of heavy showers in Mumbai. If you are not a Mumbaikar and depended on the television news, you would think that all of Mumbai is under 3 feet of water if not 8 feet of water. It is not so bad really. Cut to equity markets. The words that the media uses – crash, never before, Rs. 150,000 crores wiped out of the PSU holding of the government. It scares you, right? Well, conquer the fear.

What steps can you use:

  1. Look at your debt portfolio and realize that it could last 3-5 years even assuming that the equity markets do not revive.
  2. Look at the good quality equity portfolio. For eg. Tata Motor Dvr is surely a valuation loss and it will come back and rock
  3. Look at your good quality shares and ask yourself “if it is available 20% cheaper, will I buy more”?
  4. Stay away from fear mongering friends, web groups, face book groups, and of course Media.

It is not easy, but I have LG Balakrishna, Lakshmi machine works, Cummins, even Reliance, TCS, Mindtree – I only ask myself “If there is a bear market, and I get these shares 20% cheaper, will I be cribbing or buying with both hands?

I ask myself why I do not find any pain when one girl comes and says “I have lost 33L Rs. in FnO trading” and worse “I have used my Husband’s money”. Then why do I feel pain when I see my portfolio drop by Rs. 50L? Clearly come out of a ‘lost’mindset.

Relax.

 

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One Response to “Fear: Can be controlled in the market…”

  1. It all depends upon risk evaluation and risk taking capacity. If the fall is within the threshold then fine otherwise the person will get panic and try to save whatever is left.
    People should understand risk analysis first then get into any investment/trading.

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