Volatility persists in the Indian equity markets’ tryst with reality – of liquidity pressures, margin calls and, above all, rising cost of capital in the global markets! As the markets tread on a highly unpredictable path after the strong run-up that was witnessed in the past few months, a quote perfectly symbolizes the thought process going in the minds of investors at present – ‘This, too, will pass away.’
And, in these volatile and uncertain times, an investor just needs to:
Know what he/she is doing – Invest in stocks as if you were investing in your business.
Not let anyone else run his/her business – Determine the integrity and ability of the fund manager/broker whom you entrust for managing ‘your’ money.
Undertake an investment only when a reliable calculation indicates that there is a fair chance for a reasonable return on the investment – Investing should be based on careful calculations and research rather than plain optimism.
Have the courage of knowledge and experience – Once you have arrived at a conclusion from the facts and careful calculations, you need to act on the same caring not much about what everyone else is doing or betting upon.
Follow these principles of safe and sound (long term, in fact) investing and do not give in to temptations that rising markets bring with them, and you can ensure that the consequences of your mistakes would never be disastrous. More importantly, you will not blame the stock markets for your losses. When that happens, no matter what the markets throw at you, you will always be able to say with much confidence, ‘This, too, will pass away.’