The Corona Crisis – Is your investment safe?

The Corona Crisis – Is your investment safe?

You must have been wondering why the stock market is witnessing a steepest fall, and what one should have done. You might have seen the fall before-much steeper than this, but now the fear factor had grown exponentially thanks to the fogged news of the media.

COVID-19 has become pandemic from epidemic, hitting not only our Market but causes a global recession. More than the Corona Virus impact, the fear impact is brutally devastating, creating multifold disruptions in world trade.

The most valued company in the country by market capitalization – Reliance Industries was at 9.53 Lakhs Crore 3 weeks back, but now has plummeted to 6.72 Lakhs Crore. This is the kind of erosion the market crash did to the richest person of ASIA. He is calm and unnerved, because he is not going to meet out any long-term goal in the coming months.

stock Market

Likewise, all the investors, should avoid getting swayed by market movements & sentiments. Just because the portfolio shows lesser value today, it does not mean this will continue forever ultimately wiping out entire money. NEVER EVER. The best way to address this issue is not to constantly watch the portfolio until the market is corona-free.

Similar thing happened in real estate, but since no body watches the value on a daily basis, so none of us felt desperate to sell. Everyone believed that this is the rough patch and sooner or later it will recover.

Likewise, GOLD price was at its pinnacle in 2012, dropped drastically and never touched its 2012 peak value internationally. Still, people hold GOLD and are hungrier to accumulate more. Now it has rallied nearly 30% in less than a year.

In life everything takes time. Just because somebody is flashing your portfolio value every day, that will not push all your long-term GOAL earlier.

Whenever you are in doubt, always look at the past and examine whether it has happened earlier. If so, investigate if it has recovered or not. In fact, it has happened many a times before, and eventually it bounced back much more stronger than when it fell. As long as our investment objective is oriented in long term, it is needless to give importance to something just because it is reported daily.

Let us not allow this fear due to market turmoil destroy your hard-earned money. What we are trying to emphasize here is that you are not the lone investor, but there are nearly 5 Crore individual investors and the overall mutual fund market size is 28 Lakh Crore. It is a lot of money. We are really clueless on how long this impact would be (it is anybody’s guess). But we would like to reiterate that, however the fall be, it will recover soon if you look back. There is not much change in most of the companies listed in the stock market, the Sensex value falls but eventually it bounces back. Take a look at the table below:-

 

Year Sensex Down By Sensex Up By
1992 54% in a year 127% in next 1.5 year
1996 40% in 4 year 115% in next year
2000 56% in 1.5 year 138% in next 2.5 year
2008 61% in 1 year 157% in 1.5 year
2010 28% in 1 year 96% in next 3 year
2015 22.3% in 1 year 25% in next 7 months

 

Pained by the market fall, if you withdraw now – you are converting your notional loss into real loss and the chances of recovery takes much more time. It is time to show lot of patience and faith. Equity market needs just one good news to take direction.

Let us not forget, it is not only the market volatility, but our own actions are also equally detrimental to our dreams.

“Remember stock market is a place where wealth passes from the impatient to the patient”

This Too shall Pass

 

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