EQUITY MARKETS AND YOUR CONCERNS FOR YOUR INVESTMENTS !!!!!

My relation, well wisher and friend who is an agent of a well known mutual fund, bankers and brokers house. Beginning of this month I was asked by him if I was interested to take a short term view on stocks in my portfolio and hedge them by using features and options. He offered to recommend suitable means to ensure that I don’t suffer any loss on my portfolio. He was having good intentions and was probably like many others, including me ,was expecting a market correction soon. He wanted me to let him know my short term view on the stocks held by me in my portfolio.  

I politely declined his offer saying that I am a long term investor and my investments are based on that basis and I don’t want to spend/ waste time researching and developing a short term view on the companies in my portfolio.

With this back ground I was expecting a correction a little more than normal as the rise also had been more than normal ,but continued to be unaffected by such fluctuations as these don’t affect me or my portfolio in the long run. I still keep track of such changes mainly to review and consider making changes to my strategy and process. I like to remain current and updated with changes taking place and adapt to them.

Change is the only constant in life and so it is with equity markets, many are surprised at the sudden drop and recovery of the markets and index in a matter of few minutes yesterday on 21 Sept 2018.Such moves on the markets and increased volatility which can not be made use of by most human beings creates wrong perceptions in the minds of my target audience and students. Getting over such perceptions I want them to realize the need to benefit from my educating them to achieve their financial freedom and ultimately my achieving the purpose of creating better financial awareness and inclusion for larger humanity.

I will attempt to identify first why it happens and then its effects on modest long term investors and how to overcome it and still benefit from investing in equity

Reasons why such sudden fluctuations on the equity markets happen are :

1. Auto trading using technologies like Artificial Intelligence, Block chain , machine learning leading to programmed trading by big players like hedge funds, banks and brokers.

2. Human greed to make a fast buck by short term trading in equity markets and fear of losing money, which no one likes, so attempting to keep such losses to minimum

3. Media propaganda by vested interests like mutual funds, brokers and banks as well as political interests.

How does it affect commoners ?

1. Further strengthens their fear of equity markets as some thing complex, difficult to learn and understand and akin to gambling.Many enter the markets at higher levels and leave with losses due to fear and panic.

2. Luring more commoners to mutual funds which are assumed to be manged ethically by more knowledgeable(?) mangers. Risk is taken by the investors but they loose control over their investments and these fund managers are free to play around with the money as long as they take care to be on the right side of their bosses and some may even take opportunistic benefits to line their own pockets.

3. One then is bound to wonder why people don’t see through this and desert the equity markets as mutual fund investors or traders ? This does happen to a sizeable number of people but given the large population of India new sacrificial goats enter the market and these vested interests continue to thrive.

What does the media and so called experts say in such times:

This lot which was recommending investing in the shares of companies at a higher level now becomes silent and media talks of recommending in general buying by long term investors in shares of companies with strong fundamentals and avoid specifics. They are ably supported by charts and data and whole lot of technical data which is bound to confuse most common folks.

Another expert says “Further correction/ consolidation is likely in the short term but long term is still bullish”. This amuses me this is true of the equity markets in general and well run companies in particular for ever and we need no so called expert to tell us this gospel truth.

My message to those who want to escape from this and come out winners:

Equity markets provide an excellent opportunity to invest and grow your hard earned savings with reasonable and low risk.You can have your own control on your investments and limit losses if you develop the right attitude and are patient. Finding the right balance between greed and need to grow your investments is possible and you can learn it too.

It is the market “Dharma” to go up and down in the short term but in the long term it is possible to make use of the same market to grow your savings over long term.

“Calmer you are less disturbed your nerves more shall you love and better will your work be” Swami Vivekananda

Do you have it in you to learn ? if yes most welcome to enroll on my web site www.moneymonk.me. Its not free as anything offered free is not valued is my belief but you offer what you feel as “Guru Dakshana”, surplus goes to charity.

I am surprised that while many make a start very few manage avoiding procrastination and sustain to benefit from my offerings.