Also read : Invest in Stock market IF

We can broadly classify investors today in three kinds only

1. Who have made lot of money in last 1 year or so and kept on riding and still want to ride further
2. Who are sitting on sidelines and thinking to jump or have jumped in last few months
3. Those who wanted to exit now looking at various indicators

Most of the investors I talk are fearful of immediate correction in market, though they have not exited the market yet to cash positions. Some of them are confident after making money in last one year. Even the so called new breed of investors are also 1 year old in markets and calling themselves experienced now who have seen volatilities, and buying every dip. Time will tell who will be the Last Standing Man

So as you are reading this article, did you notice where do you belong? If you feel you are outside the purview of these three kinds, you have two choices. 1. Align to one of the view 2. Send me with your classification!

Congratulations, if you are able to see yourself amongst one of the three kinds mentioned above

Let’s read further to understand more about it and see what strategies people can adopt

Case 1. Sell out 100% and wait to re-enter at lower levels

This strategy is for people who

• Are facing Liquidity challenges
• Can’t sleep properly due to fear of crash in markets
• Borrowed money to invest
• Goals are near ( within 1-2 years)

OR

You are able to foresee with your experience drastic correction coming. It may be due to Evergrande default or US debt or may be some other reason

Advantage with these strategy is you may not lose capital if market goes down and may get a chance to re-enter at lower levels. Problem with this strategy is it is impossible for anyone to predict whether market has topped out or not. Will Market go further up and can give you a bigger chance to cash out? Will market come down and give you a chance to enter at lower levels. Nobody knows. Get away from people if they claim to know.

It is always better to cash out if our goals are near or we have debt to pay because when correction happens, it will not give you a chance to exit at your desired levels

This strategy although seems good but it can be painful as markets may remain irrational longer than you remaining rational and you might keep on getting the itch to enter again.

So be careful of this approach and you have to be sure when you should re-enter.

Case 2 Go opposite and buy more

I will strongly advised against this

Problem with this strategy is most of us will be invested in 40-50 stocks on tips from random sources and keeping most of the stocks which are in loss. So if market correction happens, we will not be having enough money to average down all stocks.

In case, you have idle money and have a itch to invest at these levels, in such cases adopt a simple strategy

• Keep buying same quality stocks based on quarterly results or in sip mode
• Plan your investment in a staggered manner instead of putting money in single go
• Invest the money which you don’t need for next 5 years

Correct portfolio allocation and conviction in the chosen stocks is a must for investing at these levels.

Case 3- Hold and reorganise your portfolio

This strategy is for people

• Who have long term views on equity
• Who have money available to invest right now
• Who do not need to sell out as no immediate money requirement
• Who understand their stocks and sitting on good cushion of profit in last one year and can handle 30% downside
• Who will not panic when market falls down and quality watchlist is ready to buy in such an event

Under this strategy, adopt the simple course of action

• Reduce number of stocks to a level which you can track easily. (20 stocks in a portfolio is considered reasonable for an average investor to track)
• Reduce the stocks positions partially or completely which you have bought on tips and not working or in loss. Getting out with a small loss is good at these levels to rearrange your portfolio
• Moving some part to cash from positional stocks. May be keeping cash close to 30-40%
• Buy stocks from upcoming niche sectors
• Buy more of convincing stocks with long term horizon of 3-5 yrs.
• Increase the positions in stocks which are showing a promising future and management is walking the talk

Case 4- Sell Partially

This strategy is for people

• Who are ready to leave last 10-20% gains on table
• Who are ready to have patience for their cash deployment
• They do not feel zealous when other people make money and they themselves stay in cash
• Under this the simple course of action is
• Sell partially up to 10-25% and sit on cash, may or may not get a chance to deploy cash soon and wait can get longer
• Rest 75% to 90% should remain invested, so if markets runs up, they are still in the market

What I am doing in this market? My answer is Case 3 ( changed from Case 4 earlier this year)

• I have booked out of most positional stocks apart from few holding with my closed group of people. Last few months, i have moved to already 35-40% cash but at same time reshuffled that cash to strengthen my existing positions or build new positions aligning to next few months
• I am holding stocks which have good story building up and adding more on each quarterly result. I do expect strong quarterly results of my investment holdings
• Any new stock which looks promising to me, I am adding as positional and converting to investment as my conviction increases
• I am not averaging down any stock as of now

So that effectively means

I am putting money into the market from so many booked positions in last few months and adding new positions

I am selling my existing less convincing or loss making positions

I am not waiting for correction in market as i have sufficient liquidity available

I am re-organizing my portfolio for next cycle of market

I am happy to ride with my invested convincing positions

Overall, what I learnt from markets in my journey is very simple and easy to follow :

You can’t be 100% invested in market

You can’t be 100% sold out from market.

Will correction happen–Few events like US Debt, Tapering of interest rates, China India talks failure, China Power crisis, India Power crisis can dampen the spirit much faster than anticipated. So yes, quite a few things are bad, China power crisis is biggest of them. Any correction will be fast and furious. Be ready to see 30-40% erosion of capital seen on Screen today.

Are things all bad — On other hand there is good results anticipated for Q2FY22 both QoQ and YoY in many companies. Bigger population has been been vaccinated either partially or fully so effectively third wave is ruled out for few more weeks. Currently many things looking positive. Be it exports, be it festive demand in many sectors. Nifty has made new highs and can go further up. In short term upside seems limited though if everything falls in place, 21K on Nifty cant be ruled out within 7-9 Months (Jun-Jul2022)

Whatever strategy finally you adopt. don’t be a blind follower

Read more on Blind follower here

Wishing you all the best and lots of luck

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Most of the investors I talk are bullish and confident after making money in last one year. They are quite confident that every fall now is a buying opportunity

Also read : Invest in Stock market IF

We can broadly classify investors today in four kinds

1. Who have entered market in March 2020 in or after lockdown and seen everything they touch turning to gold and in last one month, they lost some part of money by taking aggressive calls or to multiply it faster by trading in options and losing it faster henceforth
2. Who have seen 2000, 2008, 2018 crashes and mostly sat on sidelines in March 2020 crash and still in disbelief that markets made a new life time high recently
3. Who have adapted themselves fast and riding the trend till now
4. Those who have have rode the trend and partially exited in March-April and hold around 25% cash

So as you are reading this article, did you notice where do you belong?

Congratulations, if you are able to see yourself amongst one of the four kinds mentioned above

Let’s read further to understand more about it and see what strategies people can adopt

Case 1. Sell out 100% and wait to re-enter at lower levels

Thsi strategy is for people who

• Are facing Liquidity challenges
• Can’t sleep properly due to fear of crash in markets
• Borrowed money to invest
• Goals are near ( within 1-2 years)

Advantage with these strategy is you may not lose capital if market goes down and may get a chance to re-enter at lower levels. Problem with this strategy is it is impossible for anyone to predict whether market has topped out or not. Will Market go further up and can give you a bigger chance to cash out? Will market come down and give you a chance to enter at lower levels. Nobody knows. Get away from people if they claim to know.

It is always better to cash out if our goals are near or we have debt to pay because when correction happens, it will not give you a chance to exit at your desired levels

You may need to decide a market point where you should re-enter

Case 2 Go opposite and buy more

I will strongly advised against this. Problem with this strategy is most of us will be invested in 50 + stocks by taking tips from random sources and keeping most of the stocks which are in loss. So if market correction happens, we will not be having enough money to average down all stocks.

In case, you have idle money and have a itch to invest at these levels, in such cases adopt a simple strategy

• Have a watchlist of quality stocks and
• Keep buying from the same watchlist based on quarterly results or in sip mode
• Plan your investment in a staggered manner instead of putting money in single go
• Invest the money which you don’t need for next 5 years

Correct portfolio allocation and conviction in the chosen stocks is a must for investing at these levels

Case 3- Hold and reorganise your portfolio

This strategy is for people

• Who are confused and not sure which strategy one should adopt
• Who have long term views on equity but not sure what to do in such a bullish market scenario
• Who have money available to invest right now but not sure in which stocks
• Who do not need to sell out as no immediate money requirement

Under this strategy, adopt the simple course of action

• Reduce number of stocks to a level which you can track easily. (20 stocks in a portfolio is considered reasonable for an average investor to track)
• Reduce the stocks positions partially or completely which you have bought on tips and not working or in loss. Getting out with a small loss is good at these levels to rearrange your portfolio
• Buy more of convincing stocks with long term horizon of 3-5 yrs.
• Increase the positions in stocks which are showing a promising future and management is walking the talk

Case 4- Sell Partially

This strategy is for people

• Who are ready to leave last 10-20% gains on table
• Who are ready to have patience for their cash deployment
• They do not feel zealous when other people make money and they themselves stay in cash
• Under this the simple course of action is
• Sell partially up to 10-25% and sit on cash, may or may not get a chance to deploy cash soon and wait can get longer
• Rest 75% to 90% should remain invested, so if markets runs up, they are still in the market

What i am doing in this market? My answer is Case 4.

• I have booked out of most positional stocks apart from few holding with my closed group of people
• I am selling the stocks which have run ahead of their fundamentals.
• I am selling the stocks which have hit stop loss levels ( both long term and short term stocks have stop loss levels)
• I am holding stocks which have good story building up and adding more on each quarterly result. In case they looking pricier at this point, i am not adding and just trying to hold and wait for next quarterly results for further action towards buying/selling
• Any new stock which looks promising to me, I am waiting for correction to add more
• I am not averaging any stock as of now

So that effectively means

I am not putting new money into the market

I am selling my existing less convincing or loss making positions

I am waiting for small correction in market to add more

I am not re-organizing my portfolio for next cycle of market

I am keeping Cash levels close to 20% to handle market correction and adding more.

I am happy to ride with my invested convincing positions

I would not recommend to sell out and sit if you have not borrowed money and are not facing immediate liquidity issues. But for sure remove dud stocks and put that money into other quality stocks as always

Overall, what I learnt from markets in my journey is very simple and easy to follow :

You can’t be 100% invested in market

You can’t be 100% sold out from market.

Will correction happen–We don’t know but fact is every rise is being sold into. The situation on ground is bad for COVID-19. Correction if happens, can take Nifty to 13100, 12400 levels where we can average on our positions. Bounce back should be sharper until and unless Covid 19 gets out of control and needed stringent undesired lockdowns, In such scenario 10k on nifty cant be ruled out

Are things all bad –No, not all is bad , There is good ray of hope for Q4FY21 results and Q1 FY22 results. There is hope for different vaccines being rolled out. Nifty new high cant be ruled out as of now

Whatever strategy finally you adopt. don’t be a blind follower

Read more on Blind follower here

Wishing you all the best and lots of luck

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

If you have not read my earlier post , please go through What to do in stock market in early 2020. It’s important as you will be able to relate to this post in much better way after that!

Most of the investors I talk nowadays are not willing to invest in this supposedly overheated Indian stock market and its not about only December 2020, i can see the fear of crash looming in their talk from Sep2020. Most of them have cashed out from market in September 2020 due to Indian Chinese troop clashes and fear of US election results. What happened thereafter is more painful for such investors, Markets ran away further leaving them behind.

Also read : Invest in Stock market IF

We can broadly classify investors in Dec2020 in three kinds

1. Who have entered market in March 2020 in or after lockdown and seen everything they touch turning to gold
2. Who have seen 2000, 2008, 2018 crashes and mostly sat on sidelines in March 2020 crash and still in disbelief that markets made a new life time high in Dec 2020
3. Who have adapted themselves fast and riding the trend till now

So as you are reading this article, did you notice where do you belong?

Congratulations, if you are able to see yourself amongst one of the three kinds mentioned above

Let’s read further to understand more about it and see what strategies people can adopt

Case 1. Sell out 100% and wait to re-enter at lower levels

Thsi strategy is for people who

• Are facing Liquidity challenges
• Can’t sleep properly due to fear of crash in markets
• Borrowed money to invest
• Goals are near ( within 1-2 years)

Advantage with these strategy is you may not lose capital if market goes down and may get a chance to re-enter at lower levels. Problem with this strategy is it is impossible for anyone to predict whether market has topped out or not. Will Market go further up and can give you a bigger chance to cash out? Will market come down and give you a chance to enter at lower levels. Nobody knows. Get away from people if they claim to know.

It is always better to leave last 10% on the table and cash out if our goals are near or we have debt to pay because when correction happens, it will not give you a chance to exit at your desired levels

You may need to decide a market point where you should re-enter

Case 2 Go opposite and buy more

I will strongly advised against this. Problem with this strategy is most of us will be invested in 50 + stocks by taking tips from random sources and keeping most of the stocks which are in loss. So if market correction happens, we will not be having enough money to average down all stocks.

In case, you have idle money and have a itch to invest at these levels, in such cases adopt a simple strategy

• Have a watchlist of quality stocks and
• Keep buying from the same watchlist based on quarterly results or in sip mode
• Plan your investment in a staggered manner instead of putting money in single go
• Invest the money which you don’t need for next 5 years

Correct portfolio allocation and conviction in the chosen stocks is a must for investing at these levels

Case 3- Hold and reorganise your portfolio

This strategy is for people

• Who are confused and not sure which strategy one should adopt
• Who have long term views on equity but not sure what to do in such a bullish market scenario
• Who have money available to invest right now but not sure in which stocks
• Who do not need to sell out as no immediate money requirement

Under this strategy, adopt the simple course of action

• Reduce number of stocks to a level which you can track easily. (20 stocks in a portfolio is considered reasonable for an average investor to track)
• Reduce the stocks positions partially or completely which you have bought on tips and not working or in loss. Getting out with a small loss is good at these levels to rearrange your portfolio
• Buy more of convincing stocks with long term horizon of 3-5 yrs.
• Increase the positions in stocks which are showing a promising future and management is walking the talk

What i am doing in this market? My answer is Case 3.

• I have a watchlist which i keep updating based on consistent reading about different stocks and their potential
• I have a process where i keep updating my trailing stop loss for the trading positions on weekly basis
• I am selling the stocks which have run ahead of their fundamentals.
• I am selling the stocks which have hit stop loss levels ( both long term and short term stocks have stop loss levels)
• I am holding stocks which have good story building up and adding more on each quarterly result. In case they looking pricier at this point, i am not adding and just trying to hold and wait for next quarterly results for further action towards buying/selling
• Any new stock which looks promising to me, i am initiating a 50-60% position at this time and waiting for small correction to add more
• I am keeping my cash holding levels consistently between 10%-20%. That forces me to evaluate a new position against my existing positions

So that effectively means

I am not putting new money into the market

I am selling my existing less convincing or loss making positions

I am adding more of existing convincing positions

I am adding new stocks position partially and waiting for small correction in market to add more

I am re-organizing my portfolio for next cycle of market

I am keeping Cash levels close to 20% to handle market correction and adding more.

I am happy to ride with my 80% invested convincing positions

I would not recommend to sell out and sit if you have not borrowed money and are not facing immediate liquidity issues. But for sure remove dud stocks and put that money into other quality stocks as always

Overall, what I learnt from markets in my journey is very simple and easy to follow :

You can’t be 100% invested in market

You can’t be 100% sold out from market.

Whenever I tried to cash out in fear, I lost major gains in next cycle. Whenever I invested fully 100% in greed, I lost good amount of capital and recovery becomes difficult.

Holding and adding to convincing positions seems simple but definitely a task which is not easy

So is this a bullish market — i dont know and neither i want to know as i am working on stock specific action

Will correction happen–The more we go away from March 2020 lockdowns, greater will be the chances of economic recovery and lesser are the chances of crash. Healthy Market correction (upto 15-20%) can still happen and can give a nice entry point. Not sure of whether it will happen next week, next month or next year or not at all!!

Whatever strategy finally you adopt. don’t be a blind follower

Read more on Blind follower here

Wishing you all the best and lots of luck

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.