Should I invest in stocks now?

Well, this is the thought I’m trying to answer myself now-a-days, looking at the mirror every morning

First question: Why is the economy slowing down? Well, my one line answer to it – it’s the fear among people that’s slowing down the economy, rather than the virus itself. I’m not going to write about these things and “hows” and “whys” related to it (there are ample amount of media articles floating in the internet), but I’ll come straight to the point

Should I invest in stocks now? How should I invest?

In my opinion, this is the right time to review my investment portfolio and evaluate the stocks I always wanted to invest in

  1. I’ll choose stocks across sectors. Warren Buffet says, “One should never put all one’s eggs in one basket”. This is a golden rule now. I’ll read about the sector(s) before I invest in it. I should be able to gauge “Why would this sector do well?” I always choose that sector which is going to grow for the next 5 years. (i) Research reports, (ii) Analyst reports, (iii) investors say about the sector, (iv) what Mutual Fund Managers are investing in, etc. can be a good start to understand the chosen sector
  2. Large-cap stocks / blue chip companies across sectors are the ones for me now. I’ve been eyeing such stocks for a long time, but didn’t invest in them because they were expensive. Now is the time these stocks gives me the opportunity to earn profits
  3. If I’m fearful of losing money, I’d invest in staggered fashion. For example, if I want to invest INR 1,00,000 in a banking stock, for example, I’d invest in it in a equated installment, say INR 25,000, over a four-month period, or INR 12,500 every 15 days till I reach INR 1,00,000. In this way, I invest through the ups and downs of the stock market
  4. I keep a “sell” target before I buy a stock. I hold the stock for a period and book profits once it reaches its target price. I keep a variation of 15% in the absolute price
  5. I’d start small, if I’m new to an industry. To make a safe bet, I’ll capitalize on the expertise of a Mutual Fund Manager, who invest in my chosen sector, and see how the return came up for him/her in the last 5 years. I’ll, then, try my hands on the direct equity route
  6. I invest in a stock for at least 3 years. Equity is not for short-term investment (one year or less), nor is it for parking the money
  7. I do not borrow money from individuals or financial institution(s) to invest in stocks. While sophisticated investors do so, I recommend retail investors to stay away from such a strategy, even if there is substantial upside in stocks. I’d liquidate my term deposits and invests in stocks

In a nutshell, I’m holding cash to explore how the market volatility turns up. I know many Fund Managers who are waiting to see how low the stock markets go, so that they can buy good stocks at cheaper price. If you are a first time investor in direct equity, taking the expertise of a good fund manager, by investing through 100% equity mutual funds, is a great way to learn the fundamentals of equity investing and achieve long-term capital appreciation.

Warren Buffet says, “Fearful when others are greedy and greedy when others are fearful.” This is the time to realize this statement. Fingers crossed!