What a mayhem in the markets for the last 2 sessions! Sensex has lost around 4k/5k points in a matter of 7 sessions or so, ~2k points shaving off in last 2 sessions. Markets hit circuit filters and trading halted on two successive days. Indices continued coming down even when the trading resumed. FM's attempt to pacify and assure the markets also seemed to go in vain. Though sensex was down about 2000 points at one point today, it managed to recover sharply towards the end, leaving us with some optimism for coming days. Well u may read and follow about all that in great details. The entire media is buzzing with bloodbath stocks have witnessed in a matter of 48 hrs. Individual stocks are down by 20,30,35% in one trading session!
I felt like writing on the matter because i find myself in the middle of all this :( :\ :) .. I took to investing(trading?) in stocks last Feb. While digging web for markets/stocks/MFs etc for investment purposes( March was drawing close and I had to think about showing the investment proofs for 1 Lac savings), I registered on ICICIdirect site and asked for information about opening a Demat account. One agent of theirs got in touch with me and kept coming/calling again and again until one day I asked him to come home during the weekend and get over with the formalities. Thus, I had my demat/trading account in place.
Initially I followed ICICIdirect's recommendations and started putting small amounts in small quantities ~20-25 of recommended stocks. As markets did quite well in 2007, I made small profits and gradually had my interest and confidence rising. Starting from Nov. , I increased my exposure to equities, making some informed investments, looking for value and future performance etc. Read about the markets, terminologies, PE/EPS/BV, futures/options/derivatives/margin etc etc, read through the advices given by experts - diversify, select the themes, look for value(PE?), buy low sell high, dont follow the momentum.
In general, I had my interest and awareness about the markets increasing or so I thought! I saw my fortunes swing wildly from +60 sth to -1.0 sth .. in 4 days :( A stock, which i bought at 444, went upto 600 and is now down at 230!. I should have known better to sell it around the peak or should ve sold it off when it started coming down. (Well, now it becomes my long-term bet, I think its fundamentally strong). As someone put it very truly, "this is stock market for you - everyday it teaches us how small and insignificant our knowledge is".
I think I ve to wait for an year just to recover my money and may be make some profits. Ideally I would like to invest more at this point of time but simply dont have so much of surpluses to make risk investments. I think that my portfolio is still good, except for few wrong picks or rather wrong timings, and that Indian economy is and will do good, a 9% growth rate this financial year and a 8.5 % next year, in spite of US woes.
Well, some takeaways from this; You need to watch the market conditions more closely, read more and gauge the trends early (and of course don't be greedy, book profits when u can!). As individuals pretty novice to markets, bounded by job and other commitments, we usually don't have so much of energy, time and trading acumen to research, keep an eye and analyze global/local financial circumstances etc etc, it might be advisable to have a greater weightage towards MFs.