What One Should Expect by Investing In Indian Stocks Now Part-3
...Continue from part 2 ....
Then What Should One Do? Not To Invest At All At Such Valuation?
Everything depends upon your investment horizon and your expectation. If you are expecting next two years of 25% rise, then maybe you shouldn't. Expecting 10% over next 15 years then you may ! If you don't care about your invested principle for next 20 years then may be anytime is good time ! But the fact is, majority of investors are here for quick gratification and don't have Buffet-esq patience and pocket ! Value investor's best virtue is patience. 99.99 % simply lack that patience and will definitely lose money. In investing, just being smart doesn't matter, you need to be smarter than other investors because what you have bought, must be sold at higher price to someone else ! If everybody is smart, everybody will try to buy and sell at the same price ! So it is always the case that top 5 % will make money, no matter what.
Your friend, neighbor or colleague might have made millions over the past few years by investing in stocks but if it's just because they happen to invest without understanding then many will lose that profit and even more in coming years. Why? Because now they just think that it is easy to get 25% every year so they will not only put back their profit but will borrow ! :D
It is about to become or has already transformed into a traders market now. If you can trade it, you can make it. For example, let's say NIFTY is at 10,000 after a year then investors may not be able to make anything but trades can ride each up and down and trade both sides of the market to generate returns. But trading is not everybody's cup of tea. Part time traders lose miserably during unexpected volatility rise when they can't get out of their office meeting to manage the position. Long steady bull run like this gives many people false confidence that they are good traders. Eventually when market type changes, they fail to realize and lose more than they have made during the bull market. Besides, lack of volatility during the bull market makes trades complacent and they take much bigger positions than their risk tolerance to generate the similar return, only to see volatility spike and ruin everything. If you can take a page from Forex trading then it's similar to EUR/CHF trading between 2012 to 2015. Many new traders made thousand of $$$ doing simple trade of buying EUR/CHF against 1.20 peg set by Swiss central bank and eventually lost everything and even fall into the debt because of just single day event.
Bottom line is that now it is time to trade carefully. We won't say good luck trading because now if your luck has helped you get 100% return over a decade because you just happen to invest in XYZ Mutual Fund, then now that luck part is about to run out :)
Then What Should One Do? Not To Invest At All At Such Valuation?
Everything depends upon your investment horizon and your expectation. If you are expecting next two years of 25% rise, then maybe you shouldn't. Expecting 10% over next 15 years then you may ! If you don't care about your invested principle for next 20 years then may be anytime is good time ! But the fact is, majority of investors are here for quick gratification and don't have Buffet-esq patience and pocket ! Value investor's best virtue is patience. 99.99 % simply lack that patience and will definitely lose money. In investing, just being smart doesn't matter, you need to be smarter than other investors because what you have bought, must be sold at higher price to someone else ! If everybody is smart, everybody will try to buy and sell at the same price ! So it is always the case that top 5 % will make money, no matter what.
Your friend, neighbor or colleague might have made millions over the past few years by investing in stocks but if it's just because they happen to invest without understanding then many will lose that profit and even more in coming years. Why? Because now they just think that it is easy to get 25% every year so they will not only put back their profit but will borrow ! :D
It is about to become or has already transformed into a traders market now. If you can trade it, you can make it. For example, let's say NIFTY is at 10,000 after a year then investors may not be able to make anything but trades can ride each up and down and trade both sides of the market to generate returns. But trading is not everybody's cup of tea. Part time traders lose miserably during unexpected volatility rise when they can't get out of their office meeting to manage the position. Long steady bull run like this gives many people false confidence that they are good traders. Eventually when market type changes, they fail to realize and lose more than they have made during the bull market. Besides, lack of volatility during the bull market makes trades complacent and they take much bigger positions than their risk tolerance to generate the similar return, only to see volatility spike and ruin everything. If you can take a page from Forex trading then it's similar to EUR/CHF trading between 2012 to 2015. Many new traders made thousand of $$$ doing simple trade of buying EUR/CHF against 1.20 peg set by Swiss central bank and eventually lost everything and even fall into the debt because of just single day event.
Bottom line is that now it is time to trade carefully. We won't say good luck trading because now if your luck has helped you get 100% return over a decade because you just happen to invest in XYZ Mutual Fund, then now that luck part is about to run out :)
