10th November 2020
The market is an insane beast. It is too late to predict if it is a bull or a bear. For most of us it is difficult to predict the market. It is back to where it left off in January 2020. In between on 23rd March 2020 it dipped to 25k and now it is back to its previous peak of around 42k. Most people including me did not expect the market to recover so quickly. Yes, the market is an insane beast.
Let us forget the market for a while. Let us see and try to understand our surroundings. COVID-19 did not spare us. Nowadays we are accustomed to live along COVID-19. The vaccine is not in our eyesight. Are we living the old way? Certainly not. Will our lives come back to old normal? We do not know. At the same time, there is still noise all around us. The power consumption is back to pre-COVID-19 levels. The cars are still selling. Somehow our mind refuses to believe this propaganda. Is everything being good and are olden days back? Clear no. One school of thought is Indian economy is recovering fast. Counter view is that it will take two or more years to reach pre COVID-19 levels. I believe the latter view than the former view.
In the undergoing economic cycle, some companies and some services are going to progress very quickly capturing new requirement and adjusting themselves to the new normal, whereas another set of companies and services that were previously popular are going to lag behind. Which is why our stocks and equity funds are not back to their previous values, even though the market is back to pre-COVID-19 levels.
At this peak of the market when the economic crisis is not yet over, what can we do? We can hold stocks and equity funds which will survive or grow in the new environment. At the same time good opportunity is available to us for exiting stocks and equity funds. Like we do research in buying equity fund and stocks, same process is required for selling also. Selling and pocketing profit is also an important task as buying. It is time to sell.
Recently, lot of Robinhood investors entered the stock markets. If their portfolio is in green, they can review and exit the stocks partially or completely. It will be better for them to realize their profits rather than enjoy paper profits. Similarly, long term equity fund investors can continue the equity funds if they do not need cash at this moment. Others should consider moving from equity funds to debt funds. Later we can enter equity through stp.
Keep in mind short term capital gain tax on stocks and equity funds is applicable as per laws. Think and book profits suitably, do not let this opportunity go is one view. Same time remember that the market is an insane beast.
If you like this article, please share in your social media
Have any suggestion for future articles, please give your feedback here
Read my previous articles
Time for Caution in investments
Robbin Hood investors (New breed of investors)
No comments:
Post a Comment