As we all know the smallcap & midcap sector is undergoing a due correction since it run up a lot past 1+ year. Corrections are normal in the life of a long term investor & current corrections are triggered on US Economic Policy, Afghan Situation & Fear for 3rd Lock-downs. The correction may go deeper in upcoming weeks.
Corrections are Problem for Short-term Investor!
As the short-term investor play with 100% capital for a few 10-20% gains – any corrections will wipe away all their gains. They cannot buy more as the quality of stocks are bad. Hence they sell using stop loss & book losses. This is the reason we don’t encourage short-term – it is not purpose of stock market!
Corrections are Opportunities for Long-term Investors!
A long term investor will be happy about corrections & utilizing them to buy more of the quality stocks at discounted price. This is the reason we ask investors to keep 30% Reserve Fund (Emergency Fund).
Any investments during bear times is going to give higher returns.
As an example, we recommended Caplin Point during 2019 at Rs. 400 levels. During 2020 it crashed 50% to Rs. 200 – lot of panic investors sold at the time – but me & long term investors were buying more! Today the price is Rs. 800. So those who invested in 2019 only got 100% returns, but those who re-invested in 2020 got 400% returns. Those who exited lost opportunity!
This is what we have to do during the corrections – buy more of quality scrips – It is t he same thing which Warren Buffett, Mutual Fund Managers, Portfolio Managers, Celebrity Investors does too.
No tree grow to heaven unless its roots reach down to hell!No investor gained 500% profits unless they sailed well through -50% corrections!!
LONG TERM INVESTOR
- Keep a Portfolio of Quality Stocks – growth-focused, low-debt, under-valued, promoter integrity ensured
- Keep investing regularly installment basis
- Keep 30% Reserve Fund for bear market purchase to Boost Profits
- Keep a Vision of 300-500% returns in 5 years [do not check back before 5 year]
This is the path of real stock market long term investor!
This is what me as a Long Term Investor will be doing – not panic, but buy more.
BUY MORE QUALITY STOCKS ON PRICE CRASH IS THE ONLY STRATEGY TO WIN LONG TERM!
COMPARE WITH FIXED DEPOSITS
Fixed Deposits will never go down – but after 5 year you wil get only 50% returns.
Stock market goes down in short-term – but after 5 year you can get 500% returns.
50% or 500% after 5 year – Which one you want?
Following are the actions which I am going to do on further bear market corrections:
- BUY 30% more of Shyam Metalics on Rs. 300 levels
- BUY 30% more of NCL Industries on Rs. 150 levels
MORE PRICE DOWN MORE CONCENTRATED THE VALUE IS!
SHORT TERM INVESTOR
However, there are few investors who do not wanted to loose their gains since we had 50-500% returns on our advised stocks. They are new & cannot see the gains been lost. I recommend them to undergo mastermind training to correct themselves.
SHORT TERM INVESTOR STRATEGY
If you are a short-term investor & have bad habit of panicking seeing crashes, you can do the following:
- Find out the 100% above return stocks – sell 50% of them
- Now you are free of capital in them – keep this capital for bottom investing if the market crashes further
- You can keep the remaining 50% stocks for Infinite Returns long term – as they are now capital free
- Find out 0% return stocks – sell 100% of them
- In our case, we can only find stocks like Icici Lombard (MB), Garnet Construction (HG) is having recent poor quarters, over-valued levels – these may encounter crash in a bear market, but will take more time to recover as the underlying company performance needs to catch-up – So you can sell 100% of them with No Loss, for buying back later a t a lower price.
Remember, this strategy is only for short-term investors!
Long Term Investor – do not panic – buy more on corrections – if deeper correction happens we will come with bonus stocks too – in long term everything will be super profits only!
Short Term Investor – see above short term investor strategy.
NOTE please don’t put lot of whatsapp & email queries on same – be judicious, choose a path & act accordingly.
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