Don’t enter market if you don’t have at least a 3-year investment horizon

Sure, the stock markets don’t have that all-is-fine attitude anymore. Talk to players in Dalal Street and you would get a notion that suddenly the confidence levels have fallen drastically. Nobody seems to be sure when the market may actually make a come back. Of course, there is still a brigade which maintain that our domestic fundamentals continue to be firm and it is the global cues which are keeping the market down. Still, even they wouldn’t hazard a guess about the revival of the market. In such times, what should you, the common investor, do? Or, in other words, shouldn’t do? As you can see, nobody knows where the market is headed in the near future. In these time, what you can do at least is to don’t enter the market if you don’t have a long term investment horizon. That is, if you don’t have a minimum three years to wait, you shouldn’t put in any of your hardearned money in the stock market. This is because the market may take a while to recover and remember, we have no control over global cues. Let us move to another what-not-to-do in the current scenario in the market: do not panic. This is a common mistake committed by individual investors, especially novices in the stock market. In fact, seasoned investors who made money from the money would often narrate how common folks like us rush to the market when it is at its peak and leave it while it is in doldrums. Don’t commit that mistake. Sure, it would mean that you would see a significant erosion in the value of your portfolio. Remind yourself that by committing to stay invested for a longer period doesn’t mean watching the portfolio appreciate a bit by bit on a regular means. It also means some blips here and there. Don’t invest in a lump sum. As you know, since nobody knows about the short term direction in the market, it is not prudent to invest at one go. Invest in small sums at regular intervals to make sure that you are not trying to time the market. Also, be very careful about the stocks you are buying. Don’t chase stocks which are still holding on their own at least to a certain extent. Look at stocks across sectors with attractive valuations. Always remember that the key is a price that can be justified by the fundamentals of the company. Luckily for you, market analysts say there are many stocks available in the market with attractive valuations. All you have to do is to do proper research before getting into them. Also, don’t act on tips. This always holds true in the market. More so, in the current situation. There may be many people predicting different things and would offer you tips about a particular stock that is all set to take off now. Do remember that these guys may have been proved right in the past when the bull market was on. Then the rule was very simple. Everybody was only speaking about the market going up. The positive sentiment may have helped many predictions. Not any more. A bear market punishes such speculative stocks the most. Stay away from such stocks.