Voice of an Inadvertent Private Banker

Holding on or letting go: The dilemma of investors when markets shift

Author : Bijoy Ajayakumar, Director - Institutions & Private Business at Xanara

Before venturing into the wider global capital market, one should always try to write an open letter to one’s future self to decipher why you are investing in the very first place and what values will you be holding when the voyage hits the high and low tides, which are inherently innate to the markets.

Being in a buoyant bull market for quite a long period of time has ostentatiously given us a veiled grit that it's going to scale newer and greater heights every passing day - no different from the perception of vision that a human eye gets used to when glued on to one object for long.

On the other hand, when the market re-aligns, we tend to believe that it's going to be one-way traffic again, all the way down, towards a bottomless pit.?

This is the singleton notion that needs to be preempted if you are going to stay for the long haul in the market.

The key is ‘sense should always prevail’ – volatility is to the market what unprecedented tides are to the ocean. While none of us can control price swings, we can very well tame how we can react to them.

Today, in the midst of one of the longest streaks of a bull market, it's imperative than ever to apply our thoughts in charting out how we would respond when the next bear market sets in.

Would we still continue to follow the herd mentality, giving vent to knee-jerk reactions? or will we choose to be a contrarian investor? The endeavor should be to be the latter - to be the rationalist who will wait patiently, waiting for that light that will always appear, however long the tunnel is!