Markets keep surprising everyone. Just 10-15 days back SENSEX was at 17,800 and NIFTY at 5,100 and everyone on the street had started writing doomsday stories (partially the effect of reading money control) for the rupee and the market and contemplated exiting completely from equities.
Based on the prediction of so called market experts on blue channels, many of our members sought our advice on if they should exit completely and wait for NIFTY levels of 4,800 for re-entering.
Now we have SENSEX at 19,750, NIFTY at 5,850 and many individual stocks up 20-40% in the last 10-12 days.
We don’t know if the market will sustain at these levels, move higher or if there will be correction, all we know is that it’s completely futile predicting short term market movements.
Also, if your investment horizon is less than 3-4 years, and if you get goose bumps on finding your portfolio 5-10% down in a year such as 2011, 2013, etc investing in equities is going to be a tough ride.
However, you can be successful and attain very good returns with the below 4 points:
- Calm and composed head
- Few high quality stocks (debt free, good operating cash flows, high ROE and ROCE, high promoter ownership, etc)
- Minimum 3-5 years investment horizon
- Greedy when others are fearful and fearful when others are greedy
It’s as simple as above, though very few practice it.