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If the Market is Falling Why Should You Buy Stocks Now? - Private Briefing

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If the Market is Falling Why Should You Buy Stocks Now?
Jun 15, 2018

This is not a trick question.

Readers have been writing in asking about their stocks. Mostly, they're facing losses in their mid and small cap holdings.

But Equitymaster's editors are publishing buy recommendations!

If the market is going down... and you are already sitting on big losses, should you listen to our editors?

My answer is a resounding YES!

Last week, I presented to you Kunal Thanvi's answer to this question. You can read it here.

Today, I would like to present Tanushree's and Richa's answers.

Tanushree Banerjee

Regular readers would be aware that Tanushree is firm believer of 'safety first' when it comes to investing.

Her services recommend the kind of safe stocks you can 'bet your retirement on', making her a staunch abider of Warren Buffett's 2-rule mantra:

Rule No.1: Never lose money.

Rule No.2: Never forget rule No.1.

Sticking to this style of investing this is what she wrote to her readers last month.

    It is not uncommon for even the best bluechip business to be in distress.

    It is not uncommon for the markets to dump these stocks in anticipation of risks.

    It is not uncommon for investors to wonder if these are value traps in the garb of safe blue chips.

    If you face such a predicament, I suggest you do this.

    • Check the historical track record of the company in times of distress.
    • Asses the management's transparency with minority shareholders during the most trying times.
    • Check what are the chances of the company going bankrupt and whether the valuations still leave some upside.
    • Reduce or limit exposure to the stock.
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