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This is Not a Time for Heroism

“If you can keep your head when all about you are losing theirs, then you probably haven’t been following global financial markets over the past few weeks.” Thus went the first paragraph of a report I recently read on Bloomberg.

The dizzying price volatility – across asset classes and indifferent to national borders – might be taken as evidence that the market has lost its anchor to fundamentals.

Data Source: Yahoo Finance

Amidst all this, the world is abandoning all assets, except gold.

Equities are being abandoned. Currencies are being abandoned. Commodities are being abandoned. Debt is being abandoned.

The consistency of this ‘abandonment theme’ is shockingly clear and echoing.

We at Safal Niveshak fear that this theme shall become even clearer and more echoing over the next few weeks and months, and sadly for some long while more.

This is not a time for heroism when it comes to investing.

This is instead a time for caution and for creation of liquidity – ready cash that you can use to buy business that are likely to get very cheap.

The best we can say is that this uncertainty will end when it ends.

We’ve lived through several such incidents of a mad rush to liquidity before, but this is the most severe thus far, trumping even that which we saw in 2008.

This is the perfect storm of a crisis of confidence and at the moment all confidence is lacking and waning.

This is going to be ugly. And I want to make one thing very, very clear:

In markets such as this, it is not the “bad” stocks that fall the farthest at all times, but it is the good ones that fall too.

As the old stock market adage goes, “When they raid the house of ill repute, even the piano players and the good girls go to jail.”

So, watch out, and keep safe. We see turbulent weather ahead.

Anyways, here’re some interesting posts that we published on Safal Niveshak this week.

Have a nice and safe weekend!

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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.

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