Develop emotional strength for successful investing

Blog meant for 6 Feb 2018 Tuesday

Dear Friends,

The weakness continued in global markets today too. Nifty fell by 94 points to close at 10666. Asian & European markets have all fall massively and hence there was no chance for our markets to recover from Friday’s fall.

Looking at the global cues tonight, our markets may be slightly weak tomorrow also.

However, all this weakness is not surprising. For the last 1 year or so, global markets have not seen any major correction in prices. Hence, this fall is much needed and expected.

We have also been writing in the blog since last few months that markets are high and hence there is a chance of a fall any time.

Just like in life and business where everything is not always positive and good and we all face downs and negative phases in life, the Stock Markets too face ups and downs.

The new investors in India who entered the Stock Markets in 2017 had not seen any bad phase of the markets and hence assumed and thought that Stock Markets are the easiest place to become rich very quickly.

Stock Markets are definitely a place to help you become rich but it takes many years of discipline and patience to achieve it.

Today, we received a message from a past graduate of our Workshop saying “All your bluechip stocks are wiped out in the recent fall, will they recover?!”

Such a message was shocking since as a graduate of our Workshop, he should have understood by now and the markets were supposed to fall and the continuous uptrend of 2017 was going to end. Also, as a long term investor it does not matter how much stocks fall in the short term since you are investing in the Stock Markets with a holding period of 10-15-20 years plus.

Just because you have invested in the leading companies in the country, does not mean they do not fall when the overall markets fall.

It may be like thinking that since a person may own an expensive house, he will be protected from some natural calamity. When a natural calamity such as an earthquake happens in a particular place, all buildings may get damaged. We can only hope that since we have built our house with better materials, it may be less damaged.

Similarly, bluechips will fall when the markets fall, but usually fall lesser than the smaller companies which totally can wiped off due to the weakness in their fundamentals.

The more and more we conduct Workshops and Seminars, we realise that whether in life or in Stock Markets, the successful people are those whose attitude and behaviour is mature compared to the people who may be technically sound but not emotionally strong.

If we as investors cannot bear temporary fall in markets for some period and see notional loss/fall in the value of our stocks, then surely we cannot expect and deserve any profit when stock prices go up!

For such investors who cannot develop emotional strength and are worried about day to day fluctuations, they should invest in FDs and stay “happy” with the low interest and regret many years later for having not invested in Stocks for long term.

Even the recent tax on long term capital gains from stocks is just a small cost compared to the returns that you are likely to earn in good Stocks over long term. The tax on other instruments such as FDs, Real Estate is much higher and the returns are lower compared to Stocks.

We urge all investors who have a long term horizon of 10 years plus to not be too concerned about such market fall as long as you are holding the leading bluechips in the country. Continue to invest regularly for long term. If you are holding or have invested in inferior companies, you might have already realised why we keep emphasizing on buying only the leading companies even if their profits are not the highest in the market.

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The analysis for Short term as per technical analysis is as follows:

Nifty is in Hold zone.
The indications for individual stocks are –

THE HOLDS ARE- TCS, INFOSYS,  ITC

DON’T BUY – HINDALCO, ASIAN PAINT, AXIS BANK, SBI, TITAN, MARUTI

WAIT TO SELL – M&M, YES BANK, HDFC, HDFC BANK,

SELL –  VEDANTA, RELIANCE INDUSTRIES

There are no fresh buy indications for short term.

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All the best!

Dr.Bharath Chandra and Rohan

Please do not comment on the blog. Any questions or clarifications can be asked by sending us an email with your registration number given to you during the Workshop. Questions without quoting registration number will not be answered.

(The above comments are only the personal views of the authors of this blog. Please do your own research before taking any investment decisions. The reader of this blog must understand and take full responsibility for the Profit or Loss made by taking actions based on the above views)