Investors in online share trading who usually buy or sell during the surge in the market chasing the rally panic or kick themselves. Neither activity helps an investor or a trader think straight.
Investors in online share trading should follow few tips in dealing with the current market shakeout due to global pandemic:
- If you strongly believe you invested in the right stock(s), then turn off your laptop and do something enjoyable. Exercise is a great stress reliever. The market has already begun its shakeout due to unforeseen global pandemic. If you didn’t get chance to stop out, or failed to place earlier stops, your best opportunity lays ahead in picking up additional shares at a much lower price. Most of the experts interviewed recently tell that the next rally should start sometime between late October and November.
- Do you believe the fundamentals which engendered the stocks or commodities boom have changed? If they haven’t, then the bullishness is only taking a breather for interim period. No one is seeing any fundamental change in the markets. Let us factor in few of the fastest growing economies. Most of these countries still want nuclear power for energy, and oil production despite alternative resources of energy is still peaking. China is slowly recovering and announced the end of August will see full-fledged production. India earmarked more than $100 billion infrastructure funds last year to touch $5trillion economy by 2025. If you are invested in oil stocks, spot oil jumped across globe this past month. Hardly the end of the bull market seen in the energy sector.
- If you worry about your investment in one stock or another, then stop watching the ticker and focus on the company fundamentals. Is the rumour still true or has it changed?
Is the legal issue major hurdle in deciding market prices of the company or its fundamentals are weak?
- There’s an old cliché that the time to buy is when you feel like dumping everything you own in the category. At the exact moment you want to sell your entire portfolio of commodities like pulses, it may be wiser to add to your holdings. This applies mainly to the retail investor. Most of the professionals did dump at the top and are now slowly accumulating the shares of the naïve who waited until the washout to start selling off.
- Has a major, earth-shattering event occurred apart from this 6-month overhauling pandemic? The last decent rally in the precious metals markets in India fell off a cliff after it was discovered that India lost its dominating position in copper. Something significant and newsworthy always transpires, and it is also far-reaching. That is the trigger. As with copper sector, those were the first shots which launched a later chain reaction to end those bull markets. Similar pattern was seen when India lost its leading position in palm sector but gained it massively in technology sector.
- Before pulling the sell trigger, ask yourself: Do I really want to give up these shares to a bargain basement hunter, who will make a killing on my losses?
- Since most of you will still panic, please review the following basics for any of the stock companies you’ve read about:
- A) How much cash does the company have in the bank? During shakeouts, cash is king. Smart companies, which completed their financings during the pandemic crisis even after layoffs are fundamentally strong. They can weather the short-term storm and are well-oiled to move forward when this correction bottoms and reverses. Such companies are the strongest ones to check out when this correction looks gloomiest. Is the bank associated with the company showing profit or exposure to sub-prime assets?
- B) Has the management remained the same? Unless the top financial and/or technical people blew out the door, in recent weeks, the story probably hasn’t changed much. Companies which built a strong technical team are resilient and powerful. They will move forward.
And if you are still in doubt then go check NIFTY. NIFTY meaning is National stock exchange FIFTY. Here top 50 large stocks are monitored 24×7, any changes in their stock prices showcase the decline or growth in that particular sector. It is shortest method to understand sentiments of the market. Here, you can download share trading app.