Banned: Losses In the Stock Market
Hello,
How have you been? January literally went by in a flash, didn’t it? While Niyati takes a tiny break from work, I am at your service to keep you informed and fintertained :P But for now, I gotta ask you something:
If you said “No”, great, I am so proud of you! If you said yes or if you’re simply curious, read on to know how you can ban losses in your portfolio!
Market ka haal: The stock market faced its craziest, most volatile week since the beginning of 2023. This is partly because of 2 reasons:
1. The monthly expiry of derivatives and the annual federal budget that ought to come out on the 1st of February are just around the corner. So, there's a lot of anxiety since people do not know what to expect and we do not know if the Indian economy could keep doing well within a bubble amidst weak global cues.
2. The Adani Allegations: There was a report but Hindenburg Research that claimed that the Adani group has participated in stock manipulation and accounting fraud. Now we do not know how much truth is there to the report or its findings but just the allegations have thrown stock prices and the market into turmoil.
What I was up to: As we try to weather the storm, I did a very cool thing this week: I gave a talk on the basics of Saving and Investing on the Josh Talks channel. We can’t wait for the episode to come out! For now, we’re just keeping our heads down and waiting for a burst of metaphorical sunshine on the markets but as for the weather, Mumbai is doing pretty good, no one is ready for the 50 degrees kinda scorching sunshine yet! A certain gentleman in my house has gotten cozy:
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Humara Gyaan: Diversification is key if you're looking to invest for the long term. You've heard me say this a zillion times by now, and here's why: especially this week, a mere allegation has caused the Adani group stock to plummet and just imagine, if you have significant holdings in them you must've been very affected. Just to cushion the blow and avoid the sheer effect of something like this on your portfolio, a well-diversified investment model is essential.
Always remember to have a well-diversified portfolio, ideally, a healthy mix of individual stocks, equity mutual funds, fixed income options including bonds and debt mutual funds, as well as some gold, PPF and NPS additions in small percentages all of the course aligned to your financial goals, liquidity requirements and risk appetite. With a strategy like this, you can definitely go ahead and ban your losses in the stock market, in the long term.
Like John rightly puts, “it is better to be roughly right than precisely wrong.” So, especially if you are new investor who’s still learning to pull the ropes, please don’t listen to anyone who advises you against diversification… even if it is Warren Buffet 🤗
I’ll write to you soon!
Sayali ❤️
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