When the markets are bearish, it is natural for even the blue-blooded investors to feel jittery. However, what differentiates the winners from the also-rans is that they stay the course.
Yes. While abandoning a sinking ship might seem like a wise decision to minimize immediate losses, selling off randomly often proves to be a costly decision.
Here are few reasons why you should stay calm during volatile times and let your investments reach their full potential.
In the long-run, the market returns positive results:
On 24th August 2015, the BSE Sensex plunged 1,625 points. This was the biggest single day fall since the worldwide 2008 economic crisis. Dubbed as Black Monday, the crash eroded Rs. 7 lakh crore of investor wealth. However, the markets bounced back in the following days and recovered most of the losses.
Long-term analysis indicates that markets tend to follow a cyclic pattern. There is ample data to prove that in the long-run, the market offers positive returns. Stay calm, stay invested.
Market Correction is Good:
Market correction can be explained as “short-term drop in stock market prices”. Such corrections are ideal for bringing overpriced stocks back to a level closer to the companies’ actual worth. Such corrections and self-regulation mechanisms also indicate a sign of good sign for the health of the market. Moreover, a correction might offer a lucrative buying opportunity.
It’s a Part of the Plan:
Ups and downs, bulls and bears are all market phases. Volatility should be considered as a part of the big picture. The key to successfully weathering the storm is to remain cautious and to scrutinize the investment opportunities. Opt for businesses with strong fundamentals, proven business models and time-tested strategies. Systematic investing is likely to work well during volatile times.
The Indian Growth Story Is Intact:
While politics and international developments have short-term effects on any stock market, the Indian economy is strong enough to bear the burden and recover. The slowing Chinese economy has made India a preferred investment destination. India’s robust growth and business-friendly policies are likely to further accelerate growth and drive long-term profits.
Hence, during a downturn, avoid taking hasty decisions or becoming delusional. Learn from the past, analyze the present and keeping an eye on the future. A calm mind armed with informed decisions can be leveraged for achieving success at stock market.