Should you wait for dips when you invest?

At some point or the other, every equity investor has asked himself: Is it the right time to invest in the stock markets? Is the market overvalued? Have we bottomed out yet? Am I entering at the right levels? and so on and so forth.

This stands especially true during volatile times such as during the pandemic. The Indian equity markets displayed a tremendous increase in its volatility as shown by the VIX index rising by about three times its usual pace followed by the halting of the markets, twice, in March 2020 due to the lower circuit breach. The indices had plunged more than 30 percent from their recent highs.

At such times investors tend to forget that although such crises are real and have an effect on the global economy, historically such crises have not lasted long as the world is capable of finding answers to these challenges. We have constantly advised our clients that investing is all about time in the market-not timing the market.

Your personal circumstances such as the availability of surplus cash for your capital and tentative investment horizon dictate when it’s a good time to invest, not the current conditions in the financial markets. In fact, even if you bought stocks at some of the pre-pandemic highs, chances are you would still be in profit as the markets have already reached newer highs.

Your personal circumstances such as the availability of surplus cash for your capital and tentative investment horizon dictate when it’s a good time to invest, not the current conditions in the financial markets. In fact, even if you bought stocks at some of the pre-pandemic highs, chances are you would still be in profit as the markets have already reached newer highs.

Another recent example would be the pre-budget volatility when the markets witnessed a correction for almost a week. Looking back, the investors who stayed invested or made fresh investments despite the fall profited greatly from the post-budget rally! It is actually not surprising at all that some of the great investors such as Warren Buffet buy when the stocks begin to head down and then stay invested and ride their winners.

Our years of professional experience & regular interaction with investors throughout the nation has led us to an important & interesting observation. In volatile times a majority of the investors with surplus cash to invest wait for one of the two things: the bottom or the recovery. Unfortunately, investing in the stock market does not work like that!

No one knows where the bottoms will be and the only way to know when the recoveries begin is after it happens when people look back and identify the moment things finally began to turn around. The good news is that despite crashes & corrections markets do get better and if you have money to invest and time to let it stay invested then you don’t need to predict the bottom to come out on the top.

StockAxis recommends focusing on finding the right stocks to invest in and not on timing the markets. The key is to find an investment strategy that works for you and then curate a quality portfolio with just the right amount of allocation. You must also ensure that your portfolio is neither under diversified nor over diversified so as to maintain an optimum risk-reward ratio. We have curated four such strategies to cater to the differing requirements and interests of our clients. We also ensure that you benefit the most from your investments and limit your risks by assisting you with your portfolio management.

It is also of utmost importance to keep your emotions at bay when it comes to equity investments. We understand that it can be difficult to stay calm & make rational decisions based on facts when the market enters a correction just after you invest. It can also be tempting to dabble in stocks which are making the headlines for all the wrong reasons in the hopes of making a quick buck.

This is where you could highly benefit from hiring professionals who can base their recommendations on logical, qualitative & quantitative facts and statistical calculations & numbers. With your portfolio under their constant track and monitoring, you are bound to ensure your portfolio’s health & at the same time capitalize on any ripe opportunities available in the market. It can be argued that you lose more by making mistakes with your investments rather than by paying a quality Investment Advisor who can offer you quality research & services.

We at StockAxis believe that the key to quality returns lies in quality research. It is our understanding that if you invest in the right stocks with the right diversification for a decent time horizon then you shall eventually come out on the top and benefit greatly from the many opportunities omnipresent in the equity markets. It would be our absolute pleasure to assist you in curating one such quality portfolio filled with the right stocks.

Happy Investing,