“Mind Over Markets”

In this article we are going to discuss about the panic behavior of people when facing a bear market

Considering the upcoming situations, one should be aware of this.

Markets may face a bear market for a certain period and it is a part and parcel of financial markets.

An investor in this situation instead of panic selling should keep certain points in his mind as follows:

·?????? The pain you are going through is temporary and that no matter what, at the end of that day, you would be in your bed that night. This will definitely help keeping the mind calm and take rational decisions.

·?????? Don’t forget the history, by which we mean the historical trends in the market and the recovery of markets. This means even if your holdings are showing 30-40 or even 50% in negative, one should focus on infusing more funds in this situation because the stocks will recover because there is nothing fundamentally wrong in your companies its just the bear market pulling down the P/E of the stocks.

·?????? Cultivate a mindset of emotional detachment from your investments. Remind yourself that market fluctuations do not necessarily reflect the long-term value of your investments.

·?????? Think rationally and accordingly diversify your portfolio and try to reduce your beta while simultaneously increasing your alpha. This is a difficult task, one should consider taking advice from their financial advisors.

·?????? Set clear investment goals, i.e., define your Risk Return objectives as well as time horizon so that you will not panic in these situations.

NOTE: In this situation it is assumed that the market cycle is bearish and your holdings has no fundamental problems, there can be various other situation and one must take decisions accordingly and rationally. This article is for educational purpose and we are not SEBI registered financial advisors.