Chasing the Stupidity Run

investment mistakes

There is a famous quote by Warren Buffet “be fearful when others are greedy, and be greedy when others are fearful”. The following post is about importance of that line and the mistakes that everyone makes. Almost everyone does the mistake of being greedy when others are greedy and being fearful when others are fearful. Some have the courage to accept their mistake and mend their strategy and some just end up living in denial and making more losses.

I have seen many people loosing lakhs by following the market trend. When there is a bull run and stock market is at its peak and news is everywhere then people go and buy shares, and then when there is a bear run the same person gets frightened and sell all their investments at a loss.

2017 was year of small caps with funds returning 40-50% return in a year. Seeing that return people ran to buy the shares. The next 2-3 years small cap fund turned to be a disaster returning negative returns. Even today those funds are still in loss. Had the same person invested in FD, he would have been happier.

Similar is the case of people who bought 12-16% return giving debt fund in Aug-Sep 2020. No different is the case of those who bought Gold in 2020 when the prices were at its peak and the news everywhere is to invest in Gold for diversification.

Cryptocoins and the bloodbath is no exception. 4years back I remember everyone rushing to buy any coins available in market not even understanding what purpose it serves.

No, its not about how you buy shares or mutual funds. When any sector is at its peak then it’s the time to rebalance your portfolio and realize some gains and not invest more and make profit for others.

Sensex was at 42000 in Jan 2020 and at 44000 in Dec 2020. This is a return of 6% which is same as that of FD. Had you invested the same money as SIP of 3500 (3500 * 12 = 42000) you would have made over 10% returns. Now imagine what would have been your gain if you invested more during the bear run.

If seeing the negative returns in mid 2020 you had switched investments to Debt or Gold you would also have lost the current December 2020 bull run also.

If you fall in any of the category then just try to stay focused and hire a professional is the only advice I’ll give to you.

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