Market crash or Big stock market sale?
No one likes a stock market crash, it is dreadful for most of us to see our portfolios in red. But at the end of the day, these corrections are inevitable, after a bull run there is a bear market.
A market crash brings in a lot of emotions into play and that’s when investors make wrong decisions.
As per the legendary investor Peter Lynch, "In the stock market, the most important organ is the stomach. It's not the brain."
A market correction always comes with an opportunity that lets you buy quality stocks at throw away prices, just think of it as a blockbuster sale, where everything is available at discounted prices.
Markets are ruled by emotions of the investors, remember how indices tanked globally at the start of the pandemic? And sometimes due to that stocks are available at throwaway prices. Therefore, these falls are opportunities for savvy investors to go shopping to buy good stocks at deep discounts.
Now you would say, what if the markets fall more, what if the prices never go up?
Biggest Stock Market crashes in the history!
Well, as per the history every market correction has been followed by a recovery and went to all time highs! Therefore every correction is a buying opportunity for investors.
“At some point, we will have a major correction and everybody will get scared again, and we will have another buying opportunity.”
Even if we talk about the Indian markets, the corrections have given investors good opportunities to invest in. For example, Bajaj Finance, the company’s share price tumbled to as low as Rs. 5 in the infamous crash of 2008, but just a year after that it was trading at Rs.32, which is 6x higher in just one year!.
If we talk about its current share price it is around Rs. 5500, almost 1000 times more. So, had you invested around Rs.1,00,000 at that time in its share, you would have Rs. 11,00,000 crores now!
So, don’t be afraid to buy that dip, if your conviction and research is strong. Because in the short term markets are volatile.
But if you zoom out, they have risen over a period of time, because as they say, stock market rewards the patient investors.