What should we do in this falling market?
I guess that there are very few who can keep their anxiety and mind in control when they witness the equities that they have invested in going down continuously on each trading cycle. Everything at the current price looks like a good investment, but when you invest on it to find that the price has gone further down. It looks like you are out of the investment capital as well you have locked out your capital in the "unrealized" loss, because if you want to take out the capital by selling these equities, you will lose money.
I guess for the past few days, I am wondering the same, investing my money ,considering it as good opportunity and only to wake up another morning to find that today is even better opportunity to invest and whatever invested yesterday is currently unrealized loss.
This is how the Indian Stock market performed for last month, and I actually suffered more as my major investment in the Indian IT sector and it is almost down by 25% in last 3 months, and in my case , this investment lost almost 40% .
Since overall market is down, so my Non IT investment is also not doing great too.
So what is my current strategy?
a.) Understanding Risk.
I am no longer blindly averaging out and focusing on understanding the sector outlook in the future. If market sentiment is "currently" uncertain of a sector, then in the future it will go further down and it is good to have keep distance from it.
b.) Future potential.
I am keeping my position on the sectors that do not have any negative news and I believe thay have future potential too. In current trend, I feel renewable energy sector is one of them. I also feel banking sector will also be a good choice.
I guess bear market is a complicated topic, when it is there, it brings negative emotions to most people that they are losing value in their investment. When this bear market phase pass, then many will be regretting that why did not they invested on that phase of the market.
I will only suggest that just select best equities, not the cheapest one and only invest that you can afford to lose.
Markets are unpredictable so do your own research and it is better to take a look on data to make that decision, and do factor this point that how a sector performed in past is not a gurantee for it's future performance.
