9 Tips for Investors when Stock Markets hit all-time high

No image Nutan Gupta

Last Updated: 13th December 2022 - 10:39 pm

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The market moves are not independent but dependent on global economic and political scenarios. A political move on the national front can create ripples on the economic front. The Modi Government has ushered in an era of stock market boom. With the stock markets hovering around at an all-time high, should investors and daily traders be wary of a robust market, as markets have the tendency to surpass all predictions.

While the stock market and the political decisions of the Centre are the talk of the town, retailers and traders are making spectacular efforts to throw all excel based valuations out of the window. Investors are lapping up on subscriptions, anything and everything that seems to be showing positive growth.

On the other hand there are some investors cautious of the timings of the market given the global scenario. Are the bulls and bears fighting the fight too fast or they are overheated and will calm down soon?

Some mutual fund managers argue that these are the times to get a new set of investors to jump in while others believe that price correction might be the right time to sell but it is not the right opportunity to invest in anything new. Whatever the opinion of the experts, none of them can prove anything in a meltdown scenario like this.

Simply speaking, stock prices shoot up when companies grow and their growth has a direct impact on the market. Attaining heights in the stock market is a natural event as stocks are expected to grow beyond a period.

Well in a situation like this investors turn to financial experts for tips. We give you 9 tips to help you calm down and take an informed decision about investments.# Tackle your Fears

Investors tend to be of two kinds, one who are easily gullible and fall prey to the fear of missing out and others are those who have a risk appetite and fearless of the ups and downs of the stock markets. The former investors in a situation of market hitting a high are easy suspects of smart marketers who lure them into investing in new things with the fear of missing out on a once in a life-time opportunity. Therefore the investor ends up buying something that he did not need or was not of any need to him at the present moment.

*Beware! You might either end up buying the best stocks in your fear of losing out or end up with something you never wanted to waste your money on.

#Introspect Your Portfolio and Base Your Decision on Retrospect

When the market hits a high, investors are flooded with offers to bring about a change in the structure of their investment portfolio. Don’t push for any investment in your portfolio unnecessarily. However, if you are missing out on a financial component, this could be the right time to add it to your portfolio. Whatever addition and subtraction that you do should be based on your risk appetite and time horizon. Any allocation of assets that has gone way beyond, now is the right time to rebalance your portfolio.

*Don’t jump in at once. Enquire, research and then go for restructuring of your portfolio.

#NO investment need means NO investment need

Investors are susceptible to the lure of profits and are easily made to make an investment which is definitely not needed for their portfolio. Stocks are profitable but they are not the easy way to fulfill all investment and financial goals. If you lack the appetite for risk or are comfortable in achieving your financial goals in the long run with safe bets, then be it.

*A NO is good at times and if you are at the age of retiring than NO definitely means NO in the financial market.

#Cash Reserves

Liquid money is desirable for achieving short-term goals. Investors who have saved their money for a goal over a period and find a decent return should collect the money out and invest it in a safe asset. For short term goals, capital preservation should be a bigger priority than capital growth.

#Numbers Do Lie

Stock market is unreliable and unpredictable. Do not base any of your investment decision on the past returns of some assets. Every asset in a good market appears to be a piece of gold. However, that’s not the case. Do your research; scrutinize the minutest details of the asset before investing your money in a particular scheme.

#The Question "WHY" Never Fails

Why did you this? Why did you do that? Find answers to all your financial decisions to be sure of the investment you are making as well as you have made. Any unsatisfactory reply to any of your why should make you reconsider the investment you are making or have made.

#Know your Portfolio

Get a quick run through done of your portfolio with the positive and the negatives both being highlighted. Take the information in your stride to mark out your future plans in a better way.

#Part Investment is Better

Investing a large sum in a volatile market is not feasible. Hence, invest it in instalments. Part investments will allow you to buy and sell during price corrections and get great deals. The GST set to be rolled out by the government is sure to create temporary fluctuations in the market and create a situation of correction. This would be a good time for selling and buying and if investors are unsure of their ability to stagger investments, they should invest in products that carry less risk.

#Absolute Numbers can be Deceiving

Investors should avoid the mistake of going by absolute numbers as projected by Nifty, Sensex or any stock for that matter. The value of rupee has depreciated over the years and an x amount 10 years back would not have the same purchasing power at present. Stocks should be valued and compared with their earning potential.

The high and lows of stock markets are here to stay. These tips will guide you through the times of turmoil and help you take the right decision. Get ready to roll!

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