The Stock Markets have been on steroids for quite sometime.Infact, when the so called market pundits had completely written off the Indian Stock Markets, #Sensex just came roaring out of hibernation.The rise from 8k to 15k levels has been anything but phenomenal and maddening.Investors are bound to be happy and so it seems.But here is the catch, Investor would be a lose term to use here since there are atleast two categories of Investors that i would like to think of,
Are these folks happy? You bet they are, since the NAV’s of Mutual funds have gone up considerably.
Retail Investor:: Welcome to my world.Retail Investor or the AAM Admi makes up this category.We are supposedly the backbone for any organization coming up with their IPO’s. Any press conference will not go without the CEO saying it umpteen times ,” it is for the masses that we want to share the ownership with”. If only we remember the recent Bollywood Movie “GURU”
Is the Retail Investor happy? You bet they are, since they see the markets in green and jump in joy.The right question to ask here would be “Is the Retail Investor making money”. I so want to say YES, but I can’t
Why? Because the retail investor is a slave of the two horrible beasts that continue to haunt us all through our Equity Investments
“What If The markets fall down more?”
“What if the Rally is too short lived?”
“Some XYZ is predicting the markets to go down further,shouldn i wait before Investing?”
If you have asked any or all of the questions, and acted likewise without looking deeper, Welcome to the Club.It is this fear that makes us miss the bus and keep waiting for a Bottom that may or may not come.I relate it to Bearish sentiment only with its coherence with the Negative Sentiment. Bearing Bearish is not bad, but acting bearish without reasoning is.
So, I keep waiting for the markets to fall to 7k levels to invest my hard earned money when at 8k levels, the markets presented me with a wholesale buying offer.That is that, and i miss the bus.The next thing i know, is the markets at 15k levels.
What do i do now??I hear all talks about the markets bouncing and the Morgan Stanley’s announcing their Sensex reaching 21k predictions.But then, I start cursing myself for not buying the stocks at 8k levels and just feel sorry.
Ok, i joined late but eventually i did join the foray at 14k levels with some supposedly value buys.That’s where the other villian joins the Foray.
Greed(Bullish): This might not go well down with many, but then lets face it.It does happen to all of us.I have stocks that i bought at various levels giving me a decent average buying price.With the markets reacting to positive news(Like the election results), my portfolio is suddenly shining all green all over.Hell, one of them is offering me returns as high as 100%. What do i do, give myself a pat on the back and start waiting for it to reach the 200% mark.There i the Retail Investor gets slaughtered again.
This school of thought may not go down well with the Idea of Long Term Investing with a 5-6 timeframe but then, thats that.
The point here is that the retail investor that I am , loses his rationale with fear and greed overpowering.
The Solution:: I don’t have any or else I wouldn have been writing this one.But yes, I have made some progress to tacke the second beast Greed with what i would like to call as Target Price. Before investing in a certain stock based on whatever research that i carry out, i decide on a fixed ROI %. Once I have penned it down, it is only a matter of following it to the hilt.I don’t hesitate to book profits as and when the stock breaches my target ROI.There are again few exceptions to this given the condition of markets but yes, I have been able to do that for sometime and it atleast lands me up with a decent return and cash reserves to be prepared for another downtrend.Only If I could overcome my Fear, I would atleast be loaded with cash to make those value buyings.
Do you feel the same when it comes to the plight of the retail investor at large.Share your thoughts and add to the insights:D
PS:: This post came by as a result of one of those conversations with Arun of @trakin where he also wondered whether the retail investor has contributed to the recent rise in Stock Market.So, credit goes out to him too for this post coming alive. There i reserved one Re-Tweet I think 😀
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