4 Blunders To Avoid While Stock Markets Fall

4 Blunders To Avoid While Stock Markets FallThe current outlook on the market seems utmost pessimistic on concerns of High crude oil prices, inflation, high interest hurting corporate earnings etc. Analyst on media talking of Nifty reaching 4400 odd levels in the coming weeks.It is true that your hard earned savings needs to be protected. That remindes me of a famous quote : Wealth is the product of man’s capacity to think.

Unveiling the 5 common blunders to avoid in stock market fall

1. Influenced by short term notional loss

The stock market just acts like a voting machine in a short term & a weighing machine in the long run. If fair price of a stock is Rs 100 , it would not be trading at Rs 100, but it would trading either higher than Rs 100 or lower than Rs 100 which is why we call it under valued or over valued stock. Now it may take 3 years for the stock to reach its fair valuation but by that time , the fair value can be at Rs 130

2. Selling current positions & try to buy at lower levels

Selling at a higher price and buying again when prices fall in the hopes to replace them by buying at a lower price proved risky for many investors in the past. If these investment experts would have predicted these short term moves so easily, they would have been sitting ata home & becoming rich rather than helping others becoming rich.This is what happened a lot of investors in late 2008. They all missed the entire bull run of 2009 7 2010

3. Buying Penny stocks

Buy penny stocks which are of a value less than Rs 10 in a wake to become rich overnight. This is actually nothing but gamble & these are the people who make people dis belief investments in stock market

4. Waiting for share prices to fall further

It is most common problem among the retail investors. If the market 1 year low was 7500 & high was 21000, they want to buy at 8000 & sell at 21000. But nobody knows the market bottom. A investor should just keep on averaging his buying quantity.

The final word

My final word of advice only for long term players in the market is to never allow emotions or short term fluctuations alter their investment decision

Thanks ;
Mr. Mayank Gupta, MBA Finance,  CRISIL
Wealthbazaar.in
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