To be a successful investor in Stocks or Equity Mutual Funds one must be able to practice ACTION & PATIENCE. When to practice what, is of course the million dollar question.
In 2009, post the global financial meltdown, all the stocks including those of the good company’s, were reeling at record lows. There was no appetite for any investor to buy equities in spite of the fact that they were at record low prices, given that everyone’s existing portfolio was already in RED.
However, Warren Buffett, the Sage of Omaha as he is referred to, was busy in ACTION, shopping in the best bargain-sale of stock in a century. Sometimes action can also refer to SELLING or REBALANCING one’s portfolio after seeing significant gains. It is therefore important to be ACTION oriented as per your Asset Allocation needs or your portfolio needs.
Similarly there is a time for PATIENCE.
The current run in the stock market is quite unprecedented, given that post demonetisation, the flows to financial assets has increased in manifolds. Without a fundamental change in the economic performance of the companies/economy, this has led to an asset bubble of sorts, with fewer stocks being chased by unlimited moneys coming into the markets. Investors are gushing in with money bags with the belief that they don’t want to be left behind as the SENSEX moves upwards of 34,000 levels. This isn’t a ONE WAY STREET, this is stock market. A stock market is always a two way street; what goes up, can come down and what goes down, can also come up. Having said that, one needs patience to separate the noise from the clarity and see the value and tread carefully. Investing in Stocks or equity mutual funds are a long term game and PATIENCE is an important ally in this game.
The judicious use of ACTION & PATIENCE is what will separate the women from the girls and the men from the boys. After all, “Patience is also a form of action.” Auguste Rodin.