Don't Lose Your Peace Of Mind Because You Have Invested In Falling Market Jungle - Outside View by PersonalFN

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Don't Lose Your Peace Of Mind Because You Have Invested In Falling Market Jungle
Aug 13, 2019

The word 'jungle' is a synonym for wilderness, where the landscape is unknown and unpredictable as you may encounter wild animals or plant species or come across marshy swamps, steep valleys, caves, uninhabitable land, gloomy weather, etc. So, when you decide to foray into one, you have to be mentally prepared to face any kind of unpredictability.

Why not apply the same principle when you invest in markets? Markets are analogous to jungles, owing to their unpredictability nature. You never know in which direction it might move on account of the news of new regulatory reform, any trade war, political decision, and corporate notification to name a few.

As soon as you enter and see signs of distress, you immediately act out of fear, without considering the long-term effects on your investments.

--- Advertisement ---
Ex-Swiss Investment Banker Reveals His Biggest Investment Strategy in 4 Free Video Classes

Rahul Shah, ex-Swiss investment banker and Co-Head of Research at Equitymaster, is hosting a series of 4 free video classes for his readers, where he will reveal the details of something he's been working on for years…

The Double Income Project…

Rahul will show his readers, step-by-step, how to dramatically increase their income, potentially even double it…in what he believes is the earliest amount of time possible. a few short years.

For instance, if you make Rs 50,000 a month…Rahul's goal is to show you how to take it to Rs 100,000 in the long run.

Or if you make Rs 100,000…Rahul will show you how you could potentially increase it to Rs 200,000 in the long run.

This is different from anything Rahul Shah has ever done before – there's nothing to pay, no service to subscribe to and no forms to fill to attend these classes.

Just click here to sign up for the free video classes.

Even now, you are losing your peace of mind and giving in to your anxieties. The reason is the downward fall in the market.

Graph: Upswings and downswings of the indices

From, the graph above, you observe the successive upswings and downfalls in the markets due to a slew of events.

IL&FS episode, credit crisis, trade war, geopolitical tensions, interim budget, election outcome, full budget, regulatory reforms, slow growth in GDP, etc...

The Double Income Project: The Lazy Man's Guide to Doubling Your Income in The Long Term

One can say that in the past two years the markets have witnessed more turbulence, and the investment portfolio is dipping more than the original investment.

But, if you will ask me, on the contrary these are opportunities to invest astutely and not lose your peace of mind.

Many invested heavily in small-cap funds and mid-cap funds because they saw outperformance as compared to the benchmark return. But they failed to take note of the time period of returns generated. And greedily, they invested to earn higher returns on their investment portfolio.

But the harsh reality is that the portfolio returns are low as capital is reducing as well.

Now, investors are stopping SIPs, redeeming existing investment and vowing never to invest in these instruments again.

They didn't realise what they had gotten into initially; now, instead of trying to be patient, they are giving in to their emotions of anxiety, fear, stress, losing their minds.

That is exactly how you fall prey to the 'investment jungle' and want to run for your life.

--- Advertisement ---
Watch this Video Now And You Will Stop Worrying About Money...

If you are concerned about money, then you MUST watch this exclusive video right now.

Because in this video, Richa Agarwal, Head of Small Cap Research, talks about stocks that have made a select group of people Crorepatis.

They invested in just one stock and ended up becoming Crorepatis in the long run.

In this video, Richa also reveals her unique formula to identify such potential RARE stocks.

Plus, she also discusses her special report, 'One Stock Crorepati: How to Get Rich With This Little-Known Indian Stock'.

This video is now available for your viewing...

This video could be taken down any time soon. So, hurry…

Click here to watch the video right away…

Falling prey to our emotions is one of the biggest mistakes of investment mistake (trap) we commit.

[Read: 10 Mistakes To Avoid While Investing In Mutual Funds]

Instead, stand up to the challenge to tackle it astutely like most of the investment gurus. They look for opportunities to add more units to their portfolio for long term benefit.

Current market corrections, especially in the mid and small cap segment, has presented an opportunity to gradually add up equity exposure, due to the deep discounts available, if you are willing to bear the short-term aberrations.

Note that Large caps are still trading at higher levels though. In terms of valuations, the P/E of the S&P BSE Sensex is hovering at around 27.98x mark, while that of S&P BSE Midcaps index and S&P BSE SmallCap index is now at 29.88x and 28.03x respectively.

Do note equity funds tend to reward you if you stay invested for a longer time period, so you should focus on the long term and not on the short term.

Besides, do not forget these points

  • Ensure that your portfolio is highly diversified across various assets - equity funds, debt funds, cash, and gold funds.
  • Create the portfolio in line with your financial goals, investment time horizon and as per your risk profile.
  • Choose the right fund based on qualitative and quantitative parameters with an asset allocation investment strategy. (Consider large-cap fund, multi-cap fund and value style fund as a core part of your portfolio that can help you deal well with the risk. A smaller portion -- should include a mid-cap fund, large & mid-cap fund and an aggressive hybrid fund.)
  • Consider investing via SIP instalments on a regular basis diligently. As most importantly, the SIP of mutual funds handles market volatility. SIPs help to average out the cost of your investment. When the market goes up, you buy lower mutual fund units. If the market dips, you can pick up a higher number of units.
  • Do not invest in an ad-hoc manner based on recommendations from family members or friends, or random free advice. Do your own research and take guidance from a competent and experienced person.
  • Have patience, do not give in to your emotions or get swayed by noise during tough times, if you want to come out alive from the jungle.
  • Do keep a track of your investments and periodic review for any discrepancy.

Stay calm, as a calm mind sees more opportunities and a disturbed mind sees losses.

In short, your behaviour will determine how the market jungle will reward you.

So don't lose your peace of mind, seek opportunities instead.

PS: Consider PersonalFN's flagship premium mutual fund research service-FundSelect, if you want insightful guidance and recommendations on some worthy funds having high growth potential, in the years to come.

If you haven't subscribed to FundSelect yet, you can do now!

Author: Aditi Murkute

This article first appeared on PersonalFN here.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "Don't Lose Your Peace Of Mind Because You Have Invested In Falling Market Jungle". Click here!


More Views on News

Auto Stocks: Wealth Destroyers or Once in a Decade Opportunity? (Profit Hunter)

Sep 19, 2019

Is the auto sector down with cancer or is it just a mild fever which will go away soon?

My 7 Stocks to Buy Are Companies Which Will Be a Big Part of New India (The 5 Minute Wrapup)

Sep 19, 2019

The India we knew is changing. Here's how you can benefit from this change.

The Silver Lining in Disruptive Businesses podcast (Views On News)

Sep 18, 2019

The positive side of technological disruptions and rebound opportunities in blue-chip stocks.

Do You Hold These Worst-Performing Equity Mutual Fund Schemes In Your Portfolio? (Outside View)

Sep 18, 2019

PersonalFN explains what you should do if you hold non-performing funds in your portfolio.

Fed Up of the Bad Real Estate Market? Here's a Stock You Can Buy Today (Profit Hunter)

Sep 18, 2019

This tough period for most companies in the realty sector has been a blessing in disguise for one branded real estate player.

More Views on News

Most Popular

Buy these 7 Stocks if You Believe in India (The 5 Minute Wrapup)

Sep 12, 2019

News headlines predict gloom and doom for India these days. You should ignore them.

A Recession Proof Stock You Can Bet On (Profit Hunter)

Sep 10, 2019

Usually, the typical horizon period for my smallcap recommendations is 3 to 5 years. But if you ask me, this could be one business that you could own and pass on to future generations.

A Rare Opportunity to Buy the Top 5 Stocks in the Market (The 5 Minute Wrapup)

Sep 16, 2019

The stock market today is throwing up a great opportunity to pile on quality stocks.

This Company Will Do Well Despite the Slowdown (The 5 Minute Wrapup)

Sep 11, 2019

How financial inclusion provides a big runway for this stock recommendation.

The 5 Best Trading Opportunities I've Spotted (Profit Hunter)

Sep 13, 2019

These 10 auto stocks should be in your watchlist for the next 32 months. Paste them on your workstation NOW.


Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms


Sep 19, 2019 02:23 PM