Friday, October 10, 2008

Sensex Plunges 801 points today

Hmmm, so whats the next thing that come in your mind after seeing this news. Withdraw all the money , whatever is currently in your demat account and invest ,rather save it in a FD account. 

Well, if you are the one who is thinking in this line, then your are not alone. You are like one of the many people who have gone into the panic mode. Lets look at all the cases here now.

If you endup withdrawing your investment in the stocks, and assuming a lot of people are thinking in the same manner, the market is bound to further come down, and it gets into a chain reaction. Not something which is advisable for the overall economy. But then why should I be bother of the whole economy. All that I want is my loses to be minimum. 

Again , nothing new in your thinking. Investors would be thinking about redeeming the Mutual Funds and put it in the Fixed Deposits as the interest rates are high. Not a bad thought at all. But the effect that it will have is selling pressures on the MF's, which will again pull the market down. 

My view of the current market is as follows. The value stocks that I can get today, are one of the best. Not that we have touched the lows, but then not bad at all. For a minimum time frame of 18-24 months these stocks are really worth it.  Look at the following points. India is in a very good economic situation in the world today. We are not at all in the mess like the west is in or Europe is in. Yes, the FII has stopped investing or rather pulled the money from Indian Stock market, but the reason is not because of India. When one own economy is bad and money is the need of the hour, why would others  invest. Everyone in the US is in a liquidity crunch. So its high time that we don't depend upon FII to boost the Indian economy. India still has the highest deposits in the Savings till date in the whole world. Our banks are stable, our Insurance are in the best of shape. No one can really shake our LIC. They are in huge surplus and these insurance companies are the ones who time and again pull up the markets when FII pull out the money. 
Even if a fraction of these deposits come into equity, our markets will boom.

I am a person, who believes that this is the best time to invest in stocks. Not all at the same time, but systematically. Say monthly 5000 INR is good enough. It will average out in the long run and will fetch good returns. its definitely no point cribbing at the end of 2 years and saying, "Wish I had invested then". Then and if never have any value in the stock market. 

Invest slowly and surely and systematically. You will never lose. Don't invest to not to lose,  but invest  to win.