Be a Corona-Warrior, Not a Corona-Victim – My Appeal
A Black Swan event in the world of finance refers to an extremely negative, rare & unpredictable event happens possibly once in a decade with wide-spread ramifications. The term is inspired by the possibility of spotting a black swan among a group of white swans.
The term highlights the risk of making general conclusions with limited data. For instance, if a man sees thousands of swans and all white, he may logically conclude that there are only white swans. His conclusion logically is false, as he never saw a black swan. However, it does not mean that such creatures do not exist.
Nobody ever thought
- The doors of Thirumala Thirupathi being bolted.
- The closure of Malls and Theaters.
- Termination of Flying to other countries still further notice.
- Self-imposed curfew is never heard off.
- Everyone is turning super-hygienic and self-disciplined.
And the list goes on and on.
None can predict this and this is a fleeting challenge which soon will be history probably before the birth of Tamil new year. With the same vigor our stock market will also bounce back to normalcy.
What Action Can You Take as an Investor Now?
In the last one month alone every one of your mutual fund portfolios is down to nearly 30%. This is never heard off. However, educated and informed a person is about the market trends, there is a human angle and related stress.
I would like to present before you a few of my suggestions on what and how you should as an investor act at this juncture as per your needs.
- If there are no immediate needs to be met with your investment in the next 3 months, stay calm though it is very tough. It is the best possible advice I can suggest, and remember NOT to check your portfolio value every now and then.
- If there are some cash requirements, then let us discuss how to manage this by looking at alternative avenues like taking a loan or selling few of the funds even at loss.
- If somebody feel it is a right opportunity to invest in down trend, then invest ONLY Rs 10, if you have Rs 100 and wait for the next opportunity.
- SIP creates discipline in your investment, if you have a serious financial crunch then you stop SIP as well. Otherwise at least a small portion of your investment can keep participating in the volatile markets.
- If you can’t tolerate further fall anymore, then you have to book the loss thereby converting your notional loss to permanent loss. This is not advisable at all, considering mine & other experts experience. But as an investor if you feel seeing further fall creates more stress, then we have no other option.
In the past all the fall has recovered with much higher level than what it was before and we have the history of many such occasion.
It is indeed really very painful, but this kind of epidemic is very difficult to predict. We can be optimistic, but not unrealistically. Let’s not succumb to the deadly invisible virus clutching our health and finances. Stay Positive & Stay Safe.