hello basant ji, i really like theway u invest that is to remain fully invested but it requires lot of belief and courage ...you the funny part is that young age there is lot of panic and you feel you could have added some more if u had the money in mind .....
wanted to ask you this question ...how did you react when the market went down...you must have got your stocks at a good price but still .....what do you do in such situations ...it is not the worry whcih causes the problem but when u see the history 1930.....when the streets went buy buy buy......u know what hapened ........ofcourse risk is there in any field .........but how do u react to this ..........you must have read lots of books to draw the power of conviction in yourself..........
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Prashant when the stocks went down like nine pins in June 2006 I was scared like a wet rabbit. Yes like every one else no matter how much experience you have accumulated there must be something wrong if you are not scared when the markets fall and you are 100% invested. I would like to confess that hwen I saw Tv 18 tank to Rs 328 I switched off my mobile and the Tv and started to divert my mind off from the market. But that cannot be done. Invariably people call up and say this has gone up to that and so on. Meanwhile that RD theory of getting into cash added to the panic. Most of my acquintances are from the RD fan club and they were laughing all the way at the Bank - I told them Ok you are in cash 35% what about the other 65% but still they appeared smarter at that point in time.
I remember whjen Pantaloon went to Rs 1175 one of my inlaws called up and said " lo yeh toh ab Rs 100 ho gaya". I immediately cheacked up and found that we were still some hours/minutes from that price. he had sold at Rs 1500 odd when you sell a stock at Rs 1500 and it falls from that level you think that you are too smart not realising that it is becoming cheap with each rupee that it falls - that was my source of conviction
At all points in time I decided to maintain my position I sat back and thought that let us assume that these prices stay for a year then the sheer EPS growth would make these stocks very cheap and it would have to move up again.
At that time I had lost almost 45% of my portfolio from the peak and today it has recovered all of that and a few more but the point is with each passing year the recovery in price is higher then the fall so invariabily we build a "castle of mental strength" because with rising EPS the stocks can get only cheaper.
But the main point is I was worried, panicky, afraid, fearful, surprised, amazed, thunderstuck but al;l of these were a little less then my conviction so I managed to hold on.
In 2004 when the markets fell in May I experienced the same thing but at that time I had not made that much money from the markets so the feeling was one of not that much to lose.
One striking similarity was that in both the cases I read the October 1987 crash of the Dow Jones in One up on Wall street.
And for those investors who were holding cash nothing has changed except that the cash has been deployed in dud stocks or is at the bank - safe from the vagaries of the market.
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