Market Crash! How to Deal with This Situation
March 19, 2020, 10:25 a.m.
Today's market move warrants a discussion on CLASSICAL BEHAVIOURIAL INVESTING.
Last week's exhaustion gap occured after the market fell 30% from its life high in merely 2 weeks. The bounce was a 1700 point one which occured on the same day.(Retracing 42% of the 4000point fall that had occured). We had adviced everyone to begin cautiously buying good stocks. The daily chart is shown here.
Thereafter the market has been falling albeit in a staggered manner. Today's open came with a 400 point gap down. The downtrend turned swift. Now as per Behavioural Investing fundas, there will be a havoc in the market that should follow. The last leg of a market downfall, is always accompanied by a feelings "everything is over" or "the world is ending".
So here is our suggestion of how to deal with these market scenarios...
1)Keep identfying the good scrips,
2) Observe the people around you, ask them about the market are they willing to buy more or are they getting fearful?
3) If people are willing to buy more, wait for the market sentiment to worsen. Let them get fearful.
4) Finally when the "End of the World" is nearing (be wary of this), remember the age old Warren Buffett statement - " Be greedy when others are fearful" and start buying every fall."
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