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What Should I Do Now?

  January 22,2022

The mutual funds investors are really perplexed how the market climbed to historical 50K figure despite chaos in every corner. This dichotomy – the sluggish economy & soaring market indeed make most of the investors to ponder what if the market tsunami repeats as happened in last year and its impact on their portfolio. All kinds of media out of their way suggest booking profits at this juncture will be the prudent act. But, always introspect before taking any decision, and question yourself on the following aspects.

  1. Invested in mutual fund for long-term goal or pinned to some particular numbers in Sensex?
  2. Investment done based on trusted financial professionals or any YouTube videos. Will those guys tell when to invest again, if they tell will you listen to their advice?
  3. Investment is like running a Marathon race. Speed does not matter at all in the initial phase, while the focus should be on reaching the destination at the desired time. Remember Marathon does not get completed in jiffy, it takes time.
  4. In spite of all the above points, if one intends to book profit, can anyone zero – in the best attractive alternative vehicle for longer or shorter hauls? Unfortunately, the answer is BIG NO.
  5. Everyone talks about 10 to 15% correction – when will it happen, no one can predict. Suppose if it happens, will you invest whatever you have booked. Answer is again a BIG NO. For a simple reason that the insatiable desire in your mind to wait for further and further fall, painting the present fall as a bud. So, you will not invest fully or invest very little. When the market takes “U” turn then you will realize the opportunity lost, ultimately not reinvesting.
  6. Investment is long term while trading is short term. Whatever the stocks raised today has its own big drawdowns.
  7. Market will handsomely reward only those who respect it. If you feel smart to book profit and enter later, market will never allow you to get in again easily.
  8. Market returns are not uniform, but always non-linear only. Assume you have invested 1 Lakh and the returns in the next 20 years CAGR is 16%, which is still possible among the mid & small cap segment. In case, if someone withdraw money every year then 16000*20=3,20,000 plus principal 1,00,000 totaling to 4,20,000. No one will do anything big with 16K every year, but if you allow it to compound then it would be 20 Lakhs, yes 20 times, that is the power of compounding.
  9. In January 2020, 22 Carat GOLD was trading around 3,732 and it reached 5,420 in August, while today (21/1/2021), it is trading at 4,625. As far as I know, nobody bothered to ask me about 45% of movement in GOLD price, if profit can be booked to re-enter later. Now it is down by 15% in the last 4 months. None regrets for not booking profit. It clearly demonstrates investors biased and emotional attitude and non – goal oriented especially when they choose long term vehicle!
  10. When it comes to Realty, no one ever thinks of selling it even if the value gets appreciated instead, they simply boast. First of all, there is nothing called profit booking, because you can’t part sell. Investors feel happy saying that my property – whether occupied or rented, is worth 2 Cr where it can hardly fetch 40 to 50K!

Last, but not the least – market is Supreme, don’t show your intelligence, instead try to understand and travel with the market. You will be the real winner for sure.

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