As Russian tanks move in on Ukraine, so do EMIs on our salary accounts. And don’t even get me started on inflation, commodity shortages and Sri Lanka’s Economic Dilshan moment. Their dilscoop of switching abruptly to organic fertilizers did not quite have the climate change they were looking to avoid. In fact it created a whole new climate that one can enjoy with 10 hour power cuts. And lines for bread longer than the trailing commission of insurance salesmen. But we are now deposited on the shores of volatility, a lot like the Mumbai Indians this IPL. As markets go through the rise and fall of investor emotions, one is compelled to ask the question “Where do I see myself in 5 bear markets?”
Here are some tips to stay calm:
Ignore all advice from neighbourhood uncles: Now this would be true of their advice on everything from extramarital affairs to weight loss tips. But a special place of ignorance for your peace of mind is to ignore their stock market tips. “10 ka 40 ho gaya in three months” they will tell you. When you realize they were referring to their cholesterol levels, you might have to get your own blood sugar checked. So it might be a good idea to hedge your bets by also investing in medical diagnostic companies.
Buy the dip: This advice is not for your stock holdings. It is for you. You jump at the opportunity to acquire batata motors when it falls below 400 because you think the stock is now available at a bargain. But one small setback in life and you declare yourself degraded to B group shares. Have some faith in your own dividends. It will reward you. Just like your investment in Play3m.
Diversified data sources: Remember, the answer to investing success does not lie in following financial twitter accounts or business news anchors. In most cases, they are just following each other.
But real data lies in the esoteric and the unrelated. Like how your wife determines your love for her based on your Netflix password. Like a true investing Ninja, you must also find these unrelated nuggets of information that make sense from a broader perspective. Like how much is a big bash Bollywood wedding related to the stock price of the film they are starring in together. I guess somewhere between “Aila” and “Alia”, we all grew up.
But if you want to follow my advice, may I suggest you follow my Twitter account?
Account for inflation: That overpriced coffee is now more overpriced. And has less coffee. Account for this when you shout “A lot can happen over coffee” but how much can happen when there is so little coffee? Realize that everything is going to cost more eventually. That at some point, inflation will finally exceed your earnings growth. And you will be going bankrupt even as you think you have finally become upper middle class. So why bother stressing over it? All you must do is account for the sure-fire impact of inflation reducing the quantity and quality of your life.
Appreciate JOMO or the Joy Of Missing Out on stock market rallies: Be happy every time you miss a rally in the market just when you exit your holdings. Like that ex who became hot and sorted themselves completely just after you dumped them for a flashy startup. Take credit for the fact that it was your exit from their lives that caused this rapid jump in their valuation. Without your selfless exit, they would have remained at sub-optimal valuations. Like PSU stocks. Don’t feel bad about missing out on these rallies. Remember that what goes up, must eventually come down. If only that were true of our cholesterol levels. Because cholesterol is a one-way bull-market in which there is no profit booking. One fine day you find yourself listed in a hospital bed. And none of the doctors is willing to buy the dip. But you could hedge your bets by also investing in healthcare stocks.That’s it from me on this Funnycontrol bulletin to get your bull and bear energies going. Remember it does not matter which form of financial animal you identify as, as long as you can remain calm in volatile markets, you can always consider taking a fun vacation in Sri Lanka.