The last few months the volatility in the market has gone up! There have been huge movements in oil, gold, US $, and of course the equity markets. The volatility has been big enough to create panic among a lot of people -and many SIP have been stopped. Of course thanks to banks and Ifa a lot of new SIP have been started too, and the trend overall is still positive.

Some of my investments stood steady in the storm just fine, only slightly lower than two months ago. But a couple are sitting at new-52 week lows. We hold a mix of index funds, stocks, and mutual funds  — as a result our portfolio suffered through the same wild gyrations as the rest of the market. Well almost. Some of the shares gave me a chance to sell and buyback, and some gave me a chance to average, as well as create a bigger portfolio for doing ‘delivery based trading’. Market creates opportunities – either for buying or learning.

So, does all this volatility mean I’m looking for a job in Naukri.com ?

No! Not yet anyway.

Instead, I thought it might be fun to discuss some of the more common myths and misconceptions investors carry about the market….

• I am losing money!
• Should I sell before the market crashes more?
• We are in the middle of a big crash?
• Is this a crash or a correction?
• But Subra, the market ALWAYS prices in all the information does it not?
• I heard the market is smarter than us, so should we not sell now?
• The stock market is riskier now
• What if Namo does not come back to power? won’t the market fall by another say 30%?
• Elections are round the corner – is it a good time to be sitting on cash?
• With rising interest rates – should I sell of my debt funds?
• With rising interest rates – should I buy more debt funds?

etc. etc.

I am losing money in the Market?

Well, you gave up one asset class called cash and bought another asset class called equity. Inflation would have reduced the value of your cash by about 9% in the past one year. However your share portfolio has fallen by 1% in the past one year. Yes 2 of your shares have fallen more, but your overall portfolio was actually up by about 2% up 2 weeks ago. Now lets say you are driving a brand new car that you bought last week. You paid a nice big round sum and the balance is being paid in EMI. Somebody named Mr. Market sees you and offers you a price of Rs. 10L for this car – you have bought it for Rs. 28L. What will you do?

Worry about the offer?

Continue to drive?

Sell it off at Rs. 10L?

Negotiate for a higher price?

So don’t worry about Mr. Market – he is a sweet idiot. He comes to you – about 240 times a year and offers you a price for your assets. He does not care about you AT ALL. He will not feel good or bad about what you accepting or rejecting the offer. You can accept for a part of your assets or all your assets. Just because you laughed at the offer on Monday it does not mean he will not offer you a deal on Tuesday.

Oh you are planning to drive this vehicle for 15 years? Does not matter, Mr. Market will make you 240 offers a year for the next 15 years.

Funnily neither Mr. Market, or your car, or Mr. Subra are emotional about you. You are the ONLY emotional fool in the market. When Mr. Market sits with Mr. Retirement they discuss what a fool you are. Instead of reading messages people forward on what’s app or FB if you practiced yoga, you would deal with Mr. Market better.