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Safal Niveshak Radio: How to Invest When Fear Runs High

Here is an email I received from a reader of The Safal Niveshak Post last week…

Dear Vishal,

I have been an investor in Indian stock markets for the past 10 years, but no other time in the past have I felt the fear of investing as I’m fearing now. With so much global uncertainty, problems in India, and the way markets are behaving these days, I am not sure how to conduct myself with respect to my investments.

Can you help me in this regard?

I thought of writing a post as a reply to this email, but then worked on this short radio show (podcast).

Just click on the ‘play’ button below to listen to the podcast (and let me know your view on this medium of communication in the Comments section below).
[audio:https://www.safalniveshak.com/wp-content/uploads/2012/05/fear.mp3]

If you can’t see the button above, click here to listen to the podcast.

Anyways, I recently appeared on a show on CNBC Awaaz, speaking about financial planning and the importance it holds for an individual and his family.

One friend, who could not watch the show, tried searching for “Vishal Khandelwal on CNBC” on Google…and this is what he saw as the first link – my article titled “Why I Don’t Watch CNBC, and Why Even You Shouldn’t“. 🙂

So he called me asking how could I speak on a channel I advised people to avoid?

I clarified, “I hate all that I hear on business channels, and for the reasons mentioned in that post, but what I spoke there is something I love to speak about i.e., the Safal Niveshak language!” 🙂

Anyways, here are the three videos from that show (these are in Hindi)…

Just one more update worth mentioning here.

I recently launched the Safal Niveshak Forum. You can visit it straight from the home page or by clicking this link.

Once you register on this forum, you can post your doubts, questions, and comments related to value investing, financial planning, investment behaviour, and other relevant topics…and I or any other reader of Safal Niveshak would reply to the same.

The idea of this forum is to help make Safal Niveshak a more open and interactive platform for you, so that it gets easier for you to clear all your investment related questions and problems.

Sounds good?

Let me know how I can make your experience and learning at Safal Niveshak even better.

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. Sanjeev Bhatia says:

    Hi Vishal,
    Heard the podcast. Very concise analysis. Retail investors are always last ones to enter at bull market near peak and are the first ones to bail out near bottom due to this panic psychology. Now wonder, keeping emotions out of investing can help reap rich dividends. Some good companies are trading at very reasonable valuations and at times like these when we are near the median PE range of sensex/nifty and fear is at all time high, it makes sense to start nibbling and keep adding good stocks to your portfolio. Maybe a staggered buying approach will work better.

    Keep up the good work.

  2. Dear Vishal,

    I agree about keeping calm. I am investing in equity MFs (no stocks) upto 60-70% of my long term portfolio and continuing my SIPs. I have looked at several charts which shows equities give good returns in the long run.
    However I am not comfortable at looking in the past. The stock market is a complex many body problem which exhibits classical chaos (a butterfly flapping its wings in Greece can cause dysentery in Mumbai). While the advice to remain calm is well taken I am not sure it can be based on past history. Every new business day is uncharted waters for the expert and layman alike because of the complexity involved.
    Generic advice in personal finance should have a mathematical basis independent of time. The advice to keep calm whether you look at past numbers or not does not fall in this category.

    Consider this scenario:
    My goal is 15 years away and I calculate monthly investment at a conservative 8% despite having 70% equity (which I intend to hold for at least 12 years).

    Last year the sensex returned about -20% (my MFs returned -5%)
    Say this year the sensex returns 1% and MFs 3% and this trend continues for the next three years or for 4 different years in the 15 year period. It is highly unlikely I will reach my goal.

    May “experts” would say wrt sensex such a scenario is unlikely. This is a load of BS since there is no mathematical foundation for such an assertion. Just because a person has good health for the first 30 years of his life doesnt mean the same situation will prevail for the next 30 or even the next 5.

    So remain calm we must but for how long depends on the parameters used for the goal behind the investment.

    • Thanks for the feedback! As they say, “In stock markets, the history not just repeats, it rhymes!” So while we must not try to draw patterns just looking at the past data or past performance of stock markets, it makes sense to look at past behaviour of investors and learn from that. And such analysis suggests that people who have maintained calm while others were losing their heads, have done well in their financial lives.

      As for the scenario you’ve talked about, I guess you are talking about an “annual” return, and not “monthly” return of 8% on your investment. In any case, your long term returns are dependent on the price you pay for your investments. Like in the US, stocks have given negative returns over the past 10 years….but then the prices 10 years back were irrational.

      If you can get hold of some good investments at good (reasonable) prices now, and keep for 10 years, you have a great chance to reach your goals. That will at least get you started.

  3. Venkateshwaran says:

    The Answer to some Questions lies in the question – Why are people who want income invested in equity even if it were Mutual Funds. Not many are even aware that they can sweep their funds let alone keep watch of the Market and shift between debt and equity. Your remark about the retired being concerned prompts me to say the above. Now If one were to wait and keep watching until the fall is complete and then wait again for the markets to to reach profitable levels – No Investment advice or study of ones portfolio is necessary or useful kindly explain as to how you are suggesting this logic and actually saying one should not withdraw and reinvest, Kindly pardon my ignorance. I also understand that your task of making so many people from a wide age group is a very herculean one. Thanks

    • Thanks for the comment Mr. Venkateshwaran. Two points worth considering here. Of course I should have been more specific in the podcast, I don’t see a retiree as a person who has 100% of his money invested in income-generating investments. After all, your asset allocation should not be dependent on your age, but your need for money and when it is due. So if I retire at say 60, and expect to live till 75, I will keep all money that I need till age 65 in income-generating assets, and a large part of the money I need from age 65 to 75 in growth investments (like stocks and equity funds). The reason is – why shouldn’t I take the risk when I can to earn good inflation-adjusted long term returns?

      But anyways, sorry for being vague in the podcast. I will try to be more specific in the future.

      As for the second point about not withdrawing and reinvesting – well that depends how sure I am about an impending crash that I must withdraw all my investments and wait for a perfect time to get in. Plus, withdrawal and reinvestment has some unnecessary costs attached to them.

      I hope this explanation helps.

  4. Venkateshwaran says:

    You are suggesting that a Financial be consulted after asking if he is also invested in those Investments and based on his Financial Standing. In my knowledge many if not most people who have passed the AMFI exam are not very well to do, They update their knowledge by attending meetings and during the Launch of a MF they will be in a position to speak about the FUND House and the Highlights of the Fund. The commission is more in these Funds as compared to the older ones. There after one is left to the Mercy of the wise and Rich Fund Manager, My question is why only a well to do advisor who is also invested what about the vast majority.
    The Lady in your programme is suggesting a savings of more than 30% is that realistic? All the above are small excerpts from your Safal Niveshak. I have specially liked your article on the Mutual Funds and Fund Managers. In this TV programme I like your Advice that you always share with us about Children and How we should moderate ourselves so that we serve as role models.
    The easiest way for your children to learn about money is for you not to have any .

    • There are some other key questions that an investor must ask a financial advisor, which I listed down here – https://www.safalniveshak.com/art-of-choosing-right-financial-advisor/. In the TV show, I only had a very limited time to put forth my ideas, so talked about just three questions.

      As for the point about saving 30% of monthly income as realistic, indeed it is…and also advisable.

    • 30% should be possible for someone in the 30% tax bracket. If they cannot it is most likely because they do not live within their means. A frugal lifestyle will help one achieve this easily. I save ~ 60%. The sad reality is if I dont save so much my important goals will not be met.

      Unfortunately it will probably be difficult for someone in the 10% tax bracket to save 30% due to high inflation even with a frugal lifestyle.

      • That was helpful, Pattu…thanks! While I have no major stats to back this, a household of four people with a monthly income of Rs 40k or above can save 30% without much effort (but only if they are willing). This is from my personal experience and from that of others around me.

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