This article is a no-nonsense article, which will explain why you should invest when markets are crashing or underperforming. Why invest when everyone thinks that stock markets have crashed and so many investors have lost money.
Before we deep dive lets understand how Institutional investors invest in markets. So institutional investors are basically “Sharmaji ka beta”. They are bodies that have so much money that banks refuse to take because there not enough space to physically keep them. They are very smart investors. This “Sharmaji ka beta” makes a lot of money in stock markets and in mutual funds. But what does he do that we don’t do?
It’s simple: He buys at a lower price and sells at a higher price.
He smart, he buys when markets are falling and everyone(you) is scared. Everyone starts selling their holdings with a fear of more loss. Sharmaji ka beta is buying at this time and buys a LOT of stocks at this time. Now when markets start recovering everyone(you) is hopeful and starts buying again, This time Sharmaji ka beta is selling the same stocks to you at a higher price to you.
Now, did you get it?
Ohh, this is soo simple, even I can do it huh?. Now go ahead and read the article title 🙂
Whenever markets crash as a result of some economic or natural event like surgical strikes, demonetization or general negative sentiments in the country, Prices of great stocks fall not because companies are not doing great, but due to a knee jerk reaction and temporary negative sentiments.
During these times great stocks and mutual funds are available at a much discounted price. So for example, if a stocks actual value is INR 100, during this crash same stocks is available at INR 80, This is the time when you should be investing and buying stocks and mutual funds at a discounted rate. so you basically buying something that should be valued much more at a cheaper price.
And when the market recovers, which it will like always see your investments perform like a rockstar.
Generally, we do not get such opportunities regularly, but will definitely get 2-3 chances. This is the time when you have to stop thinking about why to invest in a falling market and rather double your investment in quality stocks and mutual funds.
Do not stop your SIPS, double when markets crash.
Invest in great companies when a market crash
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