As we all know that retail investors rushed to invest in stock market and mutual funds with eager after the covid-19! As work from home culture emerges, there emerges rapid usage of internet allover! In the lock-down many investors showed interest to participate in the market and thus stock market touches all-time highs sooner due to heavy retail investors participation.
Stock Market has rallied over 18 markets continuously without any major downfall. Up to now that’s ok, Even though there are some minor cuts, there is nothing to worry on the investors portfolio. But the recent Russia-Ukraine War Tensions trembles the investors as they didn’t experienced such market crash so far!
But this is stock market, ups and downs are a part of the stock market. What investors should learn is volatility is the skin of the game, stock market has seen many market crashes so far. This is not the first one and the last one to face such events!
Still not convinced! In this digital era all are available with proofs! Open Google and track stock market history, you will observe many market crashes, at the same time market rebounds from such crashes in a shorter period. This is quite common in the stock market.
What investors should learn from the past is not to tremble in volatile times. They have to be patient! Indeed to benefit from the market crashes investors should adopt 2 strategies-
- If you have surplus money invest additionally. But do remember don’t invest bulk money in one-go. Split the bulk money and invest in tranches whenever there is a surprise down fall. This is due to – No one can predict the exact bottom and exact top(Peak)at any point of time.
- If you are really trembling on the market fall, keep quiet and hold your portfolio for a longer period than you really expected to hold. History proves that there is strong rebound after every market crash. So have courage to extend your holding period and benefit from the market rally.
Even Though these 2 strategies are theoretically easy, it’s almost hard to implement especially for conservative investors. As all are digital today, stock market history is at your finger tips. What we have to do is implementing these 2 strategies by holding for the long-term.
- If you have courage invest additionally in small, small tranches
- If you are frightening on the market crash, this is the best time to review your portfolio and exit from junk and penny stocks at the earliest. This can be possible if you spent 30 minutes a month on your portfolio reviewing. If you think that stock has no future, exit from that stock without second thought and invest in Quality stocks as they would be available at discounted(Cheaper)prices during the market crash. If you identify those Quality stocks in this market fall no one could stop you from being rich through stock market.
What we should have during this market crash is –
- Analysing the growth prospects of the stock in the future. If you think that stock would have no future, exit from that stock as soon as possible
- Identifying the Quality Stocks(as they are available at discounted prices)
If you develop these 3 Qualities, no force can stop you from becoming rich in the next bull run.