Feelings!
Some people are elated. Shankar Sharma is enjoying exotic meals in celebration.
But others are worried. They think the market is overheated. “It’s a bubble,” they say. “Global fiscal stimulus is pushing markets higher”, they are yelling. Or some such gobbledygook.
People are talking about their feelings. Feelings of whether it will go up. Feelings of whether the bubble will burst soon.
These are feelings of fear and greed.
And they all boil down to the same old questions “Should I stay or should I go?”
For those scratching their heads, the options are
- Invest more because the market is on a roll
- Stop investing more because the market is feeling dizzyingly high. (There it is; that word “feeling” again.)
- Get out now. It’s going to burst.
What are you doing? Dare I ask how are you feeling?
Planning
We have never been a fan of “feelings-based” investing. We like a bit more structure.
And the best way to be structured is to have a plan.
The simplest way to have an investment plan is to decide how much of your money should be in equity (shorthand for the stock market). Say you decide that number is 60%.
And now you have a clear, rational, methodical and non-feelingy way of deciding what to do.
Say your portfolio is 50% in equity. Then you should be buying more shares. You could do this over a few months — no rush. And try to get the portfolio to 60% in equity.
On the other hand, with this huge run-up in the stock market, your portfolio may be 70% in equity. Well, then again the answer to “what should I do” is easy.
Sell 10% of the equity portfolio. And move it to non-equity investments like fixed deposits, or bonds or debt mutual funds.
Make a plan. Ignore feelings. Trust the plan.
If you need help managing your investments, here’s how we think about money.
If stuff like this interests you, join our Telegram channel
AutoFi (Autofitech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor
