How to Invest in the Market Today

• 'I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.' - Warren Buffett

This famous quote from Buffett is relevant today.

Investors are afraid of a bear market. Their personal portfolios are already in a bear market. They're anxious about the market falling more and potentially wiping out their investments.

The big question on the minds of investors is what they should do in this situation.

Should you sell, take your losses, and sit out this volatility?

That would be painful but it would also bring some relief. However, selling also brings with it the risk of missing out on a V-shaped recovery like we saw back in April 2020.

There's the option of partially selling your holdings but that wouldn't solve your dilemma, only reduce it. In this case, you would also need to make another decision on how much to sell.

What about holding on?

This is more painful than selling because you could potentially see more losses. A portfolio that's down 30% could be down 50% or more if you hold on to falling stocks.

Should you buy more?

There are many investors who have some money on the side they can invest. They can also choose to sell some stocks to invest in others with that money.

There are others who have missed the rally and are very interested in getting in now. Should you buy now, you're essentially taking a call on the market as a whole. In other words, you would be hoping for a quick recovery.

If that doesn't happen, you will regret your decision of pulling the trigger to soon. You will also have to wait for some time before your portfolio breaks even.

What's the best decision?

As you've probably realised, there are no easy answers.

And that's correct. There are no easy investing choices in the Indian stock market today.

The uncertainties - interest rates, inflation, slowdown in growth, changing geopolitics - are just too high. No one can predict what the market will do next.

However, one thing is clear. The bears have the upper hand in the short term. They seem to be in control these days. Almost every trading day ends in a decline.

As of this writing, the Nifty is below its recent low made in March 2022. Many largecaps are down more than 15%. The broader market of midcaps and smallcaps have fared worse. Some of these stocks are already down 50% from their all-time highs.

But that doesn't mean you can't make money in Indian stocks. You can.

You just need to look in the right places.

This is what we suggest...

• If you have found a great stocks with rock-solid fundamentals and it has fallen to a reasonable level, then it's time to put in some money. Take a partial exposure. You can invest more if the market keeps falling.
• If you're looking for stocks that tick all the right boxes as far as long-term investing is concerned, here's an editorial you must read - Looking for Consistent Compounding Stocks? Here's a Watchlist for You.
  
  You can find stocks like these in the Equitymaster Stock Screener for Consistent Compounding Stocks.
  
  If you want to start from scratch, then a good idea is to look for the most undervalued stocks in the market. It's a good place to begin your search with a fresh frame of mind. Check out Equitymaster's Stock Screener for the Most Undervalued Stocks.
• If you're holding on to stocks with poor or questionable fundamentals...SELL. They're not worth holding on to.
• If you have high quality stocks in your portfolio, you can hold on to them. Keep a close watch on their fundamentals.
• If you're a trader, it may be a good idea to sit out this volatility, unless you want to make money short selling. In that case we suggest watching this video on How to Profit from a Rising US Dollar.

These points should help you overcome some of your doubts on how to invest in the market today.

Happy investing!