Equity Mindset

In last few days, I came across many people who are distressed with the way stock market has performed over past few months (Not the one’s who follow me, as I had already warned about this a year ago through my first blog)

Are We heading for a Stock Market Crash?!

Equity Investment is an asset class which involves RISK & RETURN. Its not a risk free investment (Zero chances of loss).

Ye Fixed deposit na hote,

Bonds na hote,

Saving Account na hote,

PPF Ac na hote,

Agar equity investment me risk na hota, to sirf equity aur hum hote, aur paisa badhta jata, badhta jata, fir kya, life me hume kuch karne ki zarurat kaha thi.

Par Afsos, aisa nahi hai, Equity Investment me bharpur risk hai.

To fir?

To understand, read below.

Start by first Asking yourself, Are you an INVESTOR or a TRADER?

If TRADER (Trader is a gambler, trading for double or nothing, why worry then) When you buy equity for a time horizon for some days or months, means you want to take advantage of some price difference, price in short run may move in any direction. No one can be cent percent sure (until its an insider trading) or has control over it. Chances for gain and loss here is equal.

If INVESTOR (which means for long term horizon), then why is this fall bothering you? You invested for 5-10 yrs, right? Then stop tracking your portfolio value. When you invest in equity for super normal returns, you should know other possible outcomes too. Market me utar chadav to Bana rahega, it should not create a stress in you. If you are a long-term investor, it should not bother you, if it bothers, sell and make FD. One should never do anything at the cost of inner peace; not even investing.

13th August 2018 (Exactly a year ago I wrote a blog about possible market crash and 

How To Shield Your Equity Portfolio Against A Possible Stock Market Crash

(Don’t miss this out, my view on gold written a year ago has worked so perfectly)

Market was at ATH at that point, I don’t remember even a single analyst/advisor agreeing to my views (tezi thi, aur tezi me to gadha ghoda sab chal raha tha) all other advisors were suggesting to BUY at that point. I had totally different view and I was fearing a fall similar to that of 2008 (which still prevails)

The one who hasn’t witnessed crash of 2008, knows nothing about #StockMarket
I had lost all my savings then, it took years to be back in market & there are many who never came back. Everyone who is a financial advisor and not having experienced turmoil of 2008, is half learned. In my trading/investing career from 2004 to 2019, I have learned the most in 2008. (What makes 2008 so important – 7 out of 13 biggest sensex fall in lifetime happened in 2008)

Since last few days, I find many people posting & blaming government for stock market fall, that’s immaturity, (10 out of 13 biggest Indian Market falls were during @INCIndia, blame them?) And their immaturity lies from the fact that they are the ones who told you to buy after general election result, (Unki history ke hisab se, election results ke baad market upar hi jayega), then again after budget (ab to pakka upar jayega), right? Having no idea what was happening across globe.

Stop blaming government, if you really want to blame, blame your MF Advisor/ Equity PMS who do not understand markets behaviour (who could not smell this fall coming) and advices (actually Sells their product) only one thing – BUY. Unke liye sab market accha hai, remember they ll make money even if you lose. Buy & hold won’t work now, rebalancing is the only smarter way left in this dynamic market. You have to buy, book profits, wait, then invest again.

Ask yourself an important question, Financial Advisor or Financial Agent?

Gone are days when shares were in physical form, log kharid ke bhul jate the ya fir koi platform nahi tha sell karne ke liye. This is an era of internet, artificial intelligence, majority of trading is done through Algotrading.

Humne to Finance ke ‘Portfolio Management’ chapter me padha tha, every equity stock is attached with two risk 1- UnSystematic Risk (Specific Risk), eg. DHFL defaulting will have direct impact on its stock price. 2- Systematic Risk (Market Risk/Undiversifiable risk) – Change in tax, currency, crude price change, etc will have indirect effect on stock. To keep a watch on systematic risk, how many of the readers keep a track on global factors? What was announced in last fed meet? Why the current interest rate in germany is negative? Why is gold surging? Systematic risk was clearly evident and I had already shared this with all calculations a year ago.

Forget whats happening in India, check these major events happening across globe

  • US-China Trade War
  • Negative yield of many developed countries (Swiz, Germany, Belgium, Austria, France, Ireland, Spain, Japan and more)
  • Hongkong Protest
  • Yuan/Dollar devaluation
  • BrExit Decision
  • Slowdown indication from figures of economy of many countries
  • US Debt & QE

Index is still overvalued in valuation terms, bluechips have not yet corrected much. Nifty is trading at PE of 28 (considered as very costly). I am compiling data of nifty stocks over past 12 years and the findings are very interesting (Eg. Reliance is still giving total 122% return in last 3 yrs, 31 out of 50 Nifty cos are still giving positive returns over period of 3 yrs and many such interesting facts) will share link in this blog soon, keep tracking.

BNI has a saying “What goes around, comes around”

Stock market also has a silent saying “What goes upar, comes niche”

Fool is the one who sees and expects market to be in upward direction only.

What now ?

Yes! We are waiting for some positive news and then series to get the market in positive momentum again. And it seems gov is soon going to come with revival measures, it may boost the market for short term, but for the overall market to revive needs major positivity from across globe.

I am getting a very common question from everyone, Ab kya kare?

Difficult to answer, as I am not invested right now (Becoz I wrote this last year Read this) and the best advice comes when you are involved. Things, Scenario & Sentiment has changed a lot since then, but still I think one should

1- MF (Dont add lumpsum, you may continue with SIP)   2- Equity Holding (Book profits if any, do not buy, wait for market to settle, pain is not over, worst is yet to come)     3- Consult your Investment Adviser 

Equity investment will always generate Alpha returns, but not in a traditional approach now, only through Smart approach. Indian Stock Market is passing through a tough phase. School book taught us Business cycle (A Reality- which can never be denied, it has been since ancient ages). I am personally very optimistic about Indian Economy but with a long-term view, in short term, pain may not be over yet. In coming years India will turn out to be one of Big & Strong economies of the world. We are yet to reap the benefits of Demographic Dividend.

This is just my personal view, in my trading/investing career of 15yrs, I believe I have just learnt 10% of finance, the day I learn remaining 90%, I will start making arbitrage gains only. And that’s not possible, so I keep on learning. You may have different views, open for positive discussion.

“Gaining in bull market is not smart, not losing in bear market is” – Chayan Agarwal

Leaving the readers with a question.

What’s smart? Advising to buy in bull market or advising to sell before a bear market? (Hint- Financial Adviser or Financial Agent)

My view- Advising to buy in bull market is easiest job ever (8 out of 10 yrs are going to be bull, everytime is a good buy, but thats not expertise)

Not advising to sell means, financial illiteracy.

I have taken up a goal- To create Financial Literacy and help people achieve financial goal. Breaking the stereo and traditional approach of investing.


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This Post Has 4 Comments

  1. 👌🏻

  2. Gold ?

    1. I recommended Buy to gold in April when it was 31600, now its already 38000. As per the prevailing condition I see upward trend continuing and i am still holding what I bought in April. And to add more, gold and share market will have inverse relationship for sometime, means if stock market falls gold will keep on increasing and viceversa. I see gold 47000 in very near future. This is just my analysis, do not take this as recommendation to buy, please do you own analysis before making any position. 🙂

  3. 👌🏼👍🏼

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