Feeling Happy On The Recent Market Rally?Be Prepared For The Down-Turn Too!

Recent market rally in the stock market makes investors trapped that stock market always rewards investors. So many people started trading without knowing the basics imaging that the stock market will be like this forever!

But the fact is that Stock Market is volatile in nature and you can expect negative returns for years too! For example, stock market crashed nearly 40% in a couple of weeks in march-april 2020 due to the pandemic Covid-19. This is the perfect example of expecting market crash at any time. You have to be prepared for this!

Due to huge retail investors participation and Foreign institutional investors hope on the indian economy, stock market recovered and reached to the new highs! But this will not happen always!

As the stock market is at all-time high, there is a possibility of market correction. Even a small bad event would effect the stock markets to react sharply. But retail investors neglects this and invests more and more money by watching the recent rally.

Do remember Legendary investor warren buffet’s Quote- “Be Greedy when all are fearful and be Fearful when all are Greedy”. Warren buffet said this words on his experience in the market. But retail investors don’t have such long experience in the market. That’s why retail investors burn their fingers without estimating the market strategy.

Though stock market rewards in the long-run, retail investors tend to earn huge returns in the short-term and invests more when the stock market is in rise and sell when the stock market is in down-turn. This is the natural tendency done in the market where some investors say stock market as “Gambling”; but in reality it is not gambling, it is the investors emotions over -“Fear and Greed”

Recently Demat a/c’s were opened hugely by the investors with a view to trade/invest in the stock market. But they are unaware of the past market corrections which are furious to digest in the minds of the investors.

Though opening demat a/c’s hugely is a good sign, we can’t expect the investors staying invested in the deep market correction. Before entering into the stock market, One should be aware of the crests and troughs in the market. Seeing the market rally makes you greedy, but you must be prepared for the market correction too! If you have the courage to stay invested in the bear market, you can continue or otherwise be prepared!

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