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investing through panic

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I believe most of the people in my surrounding know very well that investment is my first love. People have known me for my market-passion and the way I’ve grown in this journey of mine. I love to cater to my friends’ queries when it comes to understanding the market and the investment methods I apply (with whatever little knowledge I do but they have proven to work well for me at least by now). My knowledge is acquired since my college days wherein I began to learn of investment & share-market via a gaming trading platform.

These days, I’m observing a strange tendency of communication from my known-ones to me. I’m getting a lot of calls/text messages and Facebook messenger pings from the people in my family and friend circle asking what company’s share they should invest in. During this market panic they want few short term recommendations from my side to gain some profit out of the situation. Regardless of the fact that I’m a long-term investor and don’t believe in running after any company’s dip or rise in such short term tenure.

“There’s a saying in the market – one size does not fit all.”

While my investment picks might suit you perfectly, they may not make the cut for you. Why??

Because both of us have different behaviors, different risk taking abilities and lastly, different family conditions.

You Approach me with a Fear of Missing Out (FOMO)

Most of the times people approach me trying to invest into share market so that they don’t feel like missing of the opportunity. I would want to ask a single question to all of those investment seekers, “Why do you want to invest NOW?” Were you following any list of shortlisted companies for you? Did you read about the companies’ fundamentals? Did you do your research on how the company wants to shape the business in future? Do you assess the business longevity and relevancy in the market? What segment of business interests you, which you would want to read about?

If any of these questions give you an answer as a “NO”; you don’t really want to invest in a business and become a part of it. Instead, you just simply want to copy your friend’s profile thinking you’ll make the similar profits.

Also Read: What You Need to Know Before Buying Stocks

Do you really think it’s possible? I might have kept XYZ Company under my To-Buy radar for more than few years. I might be following the company’s & its promoter/director’s every now-and-then moves closely. I might be reading their annual and quarterly submitted reports to convince me to buy them. I might have bought the share at a price which was suitable in that time-frame and is not valid now.

And the most important thing, I’ve got into the share buying with a long-term view to earn profit. You might want to sell it in a month or so, which obviously won’t give you the similar results of gain. Then why do you want to get into this just for the heck of buying? Do your own study & research and make your own decision while buying/selling a share.

Always remember, “Investing Is a Single Player Game; Thou shall not have an investment team”. The stock tips can result into blame games and cause more harm than good.

Novice Investor: My Advice would be to go for a Monthly SIP

Mutual funds, NEXT NIFTY 50 and Index funds are few options that a beginner can start their investment with.

Mutual Funds are advantageous for the new investors as they allow you to get the returns of an entire section of the market without having to invest via buying and selling in individual stocks. Which requires you to put a lot of efforts while reading them methodically.

To learn about investing in shares, you need to research each of the selected companies. You must comprehend their financial reports. Financial reports give a brief of how much money the company is making and what approaches it is using to grow their profits. You also must be aware how the economy is doing and how that will move the company and its business. Except you do all this homework, you won’t be able to select fruitful companies.

Mutual funds don’t need as much time to research since the fund manager does that for the investors. But you need to study the past performance of the mutual funds and then decide onto your investments. But in either of the cases, you cannot deny the fact that you need to know how the economy is moving throughout the country and the world as a whole.

Also Read: How to Keep Investing during Panic

To sum up, I would just say it is no-way wrong to ask for stock ideas/tips from friends.

However, it is important to take such advice with a skeptical mind and do your own due attentiveness. It is pointless to play the blame game in future if things go south because you only are responsible for your own monetary decisions at the end of the day.

It was March 2020, we were all set to end our financial year just as every year. Life was sailing pretty normal, but something wasn’t going right in the world as a whole. China was hit by a viral outbreak later termed as CORONAVIRUS (COVID-19) by WHO in January 2020. And, March 2020 it has entered India as well and infected many. The pandemic had taken a deadly shape and the entire country is facing a lockdown situation to avoid any contact with people who could be potential carriers of the virus.

I’m feeling like I’ve time-travelled in my life and telling these stories to my grand-kids. Really? Would I want to share the story this way? I don’t think so! Rather, I’ll share with them the opportunities I could grab during the economic breakdown ad how they made us successful as a family.

The time when we are house arrested as per the Government notice, it’s time to not just Netflix and eat the delicious food at home but to plan for a better life ahead. This Coronavirus pandemic situation has got the economy slashing more than a recession alone would do. Here is what I’m doing to take due advantage of the market scenario and plan for a better future:

Thinking Long-Term

I have never in my investment journey thought of short term investing when I chose a company to pour my money into. I always want to associate myself with the companies that I have belief in fundamentally, and when such happens I don’t detach myself from the same in short run.

I started investing with very little money in few thousands, investing was the only way that I could think of for achieving financial freedom. The journey started in the summer of 2012 and somewhere along the way, it turned into a passion and love for the share-market.

I would like to highlight one of my investments in the company Deepak Nitrite Ltd. Five years ago, I began buying its shares and the very first lot that I bought was priced at INR.60/- per share. During this period of last five years I kept on buying its shares repeatedly and it was a joy watching the share reach the price value INR.540/- per share.

Sir Warren Buffett’s Influence

When I used to read Sir Warren Buffett say, “There will be a Multi-Bagger share in your portfolio which will outperform every other share and will make you believe in the power of compounding” I used to wonder! But personally got to experience in my portfolio with Deepak Nitrite Ltd. I have been holding this share for more than 5 years now, and it has more than doubled my wealth in this period.

Also Read: 10 Secrets That’ll Boost your Money Saving

Initially your investment could be in thousands, then lakhs and then definitely in crores one day. But patience to continue keeping a long term view is really important when it comes to investment. You cannot think of becoming a billionaire unless you start investing with that thousand bucks in your bank account which you could spend sitting in a café in just 2 minutes time.

Nothing is Permanent in this World

We, very often begin taking things for granted. For the first time in my life, I am experiencing such pandemic situation spread in the world which has put everybody’s life in danger. Such situations make one think that nothing is permanent in this world!

While I’m pen downing this piece, I’m reading in the news that we have 550+ positive coronavirus cases in India and 19000+ people are dead due to this deadly virus worldwide. All these people would never ever have thought such an outbreak could lead to loss of their lives.

So, don’t wait for the world to be favorable in all aspects for you. Begin your investment whenever you think you’re ready and are convinced with the company’s philosophy. Just keep a good track of the invested businesses, the market gives an opportunity to buy them back at more reasonable valuations during such crisis situations.

I have a detailed self-made checklist to judge a business before investing in its shares. The checklist has many factors like quantitative, qualitative, management philosophy, valuation, promoter and the full picture for past mistakes. I have made it a discipline to not buy any stock before going through my checklist thoroughly. Also, I keep updating my checklist with new learning regularly.

Also Read: Value Investing: The Butterfly Effect

I urge that one should invest with a long term (at least five years and plus) horizon. But keep checking how the business is performing every quarter. Long-term investment does not mean you invest and then forget about it, instead keep a brilliant track of the same.

Happy Investing Guys!

This is not the investment advice, please do your own research.

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