Been there. Done that.

Not too many people understand the importance of staying calm. The year was 1992. Markets were going up in a tizzy. This client had bought 20,000 shares of Mazda Leasing (aka Mazda Industries) for Rs. 11. He had no clue why he had bought it. In fact I had bought it for him. He never objected to my doing anything to his portfolio – I ad full, total liberty.

So he asked what price will it go? I said ‘It is a speculative shit, so we will sell every rise above Rs 50. So sold of say 200 shares at 58 – the first time I sold any share at all. Then I sold 200 at 116. Now I said I will increase the stake – sold 1000 at 200. His cost was recovered. He was happy having recovered his costs…but to cut a long story short sold off 8000 at 1200.

Price went up more – we had completely sold off by 1300. End of story.

Sold a lot for many clients in 1992 – we knew there was a guy named Harshad, but did not know his colossal impact. Sold a lot of scrips because we felt that the pe was not sustainable – nothing to do with the sensex.

Other than such dizzying heights, I rarely react to the markets. I react to bad results or client needing money for a particular goal that was planned earlier. In fact my dialog with the client goes like this:

• if you are not going to go out of the market permanently do not sell when the markets are low
• actually you should be buying not selling when the markets are down
• if your goals are far away, keep investing, not divesting
• the best time to invest is when you have money. Best time to sell is when you need money.
• markets will do what it has to do. You should do what you have to do.
• In uncertain markets pundits tell you cash is king
• In uncertain times, best place to keep your money is a good index fund, NOT CASH.
• Have adequate insurance – most emergency requirements are medical emergency
• if you want to fool around with equity, why are you coming to ME?

READ ON – been there done that…i have been in the thick of bear market, and in the thick of the bull market – and not recognised them correctly. However, there has been a lot of learning from the markets…

read on if you want to know what some others say

http://www.behaviorgap.com/attention-blunt-advice-scary-markets-drill-sergeant/