New Delhi. When the market is bullish, it creates panic among many investors. Investors feel that the peak of the market has come and it can put back gear anytime. In such a situation, they believe in putting profit in pocket by selling. But is this belief true for investment?
In the eyes of the famous investor Howard Marks, this is a terrible mistake. Marx says that if the decision of an equity investor is based on fear, then it will definitely be a wrong decision. Marx says that there is no place for fear, panic and psychological assumptions in investing. What to do when the market is fast, know, from Howard Marks Investment tips..
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The biggest mistake of selling in a rush
Marx says that many investors make a mistake when the market is going up. That mistake is to sell shares. They think that a fall is inevitable now and they are avoiding future losses by selling their stocks here. Whereas it should be done that one should either buy or hold shares. Because it has often been seen that the markets which go up, they go on moving forward. That’s why the investor should focus on the returns coming in the long term and not the profit coming from selling now. Marx says that investment means converting capital into asset in the long term by assessing the prospects of a stock in a very logical way. Not just putting some money in your skein.
Profit taking is not a good strategy
Taking profit may sound good, but it is not a good strategy. Marx says that the notion that profit never hurts anyone is beneficial for short term investors, but adopting it for professional long term investors is like hitting an ax on one’s foot. So if the market is bullish. Even if you are getting good returns, you should stay in the market instead of taking profit. This will benefit you a lot in the long term.
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Fear cannot be the basis of investment decision
Marx says that there can be many good reasons for selling. But if you become a seller just because of the fear of making a mistake or making a loss, then it is very dangerous for you. The selling decision should be based on an investment approach made up of sound financial analysis, firm determination and investment discipline. This decision can never be based on the psychology of the investor.
benefit from the mistakes of others
Marx believes that successful investment decisions are made by looking at the mistakes of others. If someone is selling shares out of fear, then this mistake of his is giving a true investor a great opportunity to buy. And he should profit from the mistake of the scared person. Market guru says that the basis of investment decision is a proper assessment of the capabilities of any asset. This decision cannot be made only on the basis that the market has become very bullish and now it will fall.
Quick manipulation of portfolio is not right
According to Howard Marx, if an investor makes frequent changes in his portfolio according to the changing market conditions, then he cannot earn. Selling once in a rush, then buying and selling again is a completely wrong strategy. So when the market is bullish, don’t let your heart rule your mind and work on a long term strategy.
Tags: investment tips, stock market