As you probably know almost all global markets (especially the emerging markets) are correcting and all of them have corrected sharply. It doesn’t matter whether you are from India or China or USA, the recent fall in stocks would have affected you.

I’m sure that you must be in a panic situation now even I’m in a panic situation. So that made me to write this blog post. I started investing in Stock Market back in 2005. But I didn’t make any significant amount of returns. In fact I have booked losses several times in range of 5 to 20% and then quit the stock market for some time. But I decided to enter stocks again back in January and started building a portfolio. I started with Mutual Funds too but when the markets fell sharply. I asked myself "Why should I invest in Mutual Funds when the Stock Market is attractive?" that made me to invest directly in stocks. And I began to buy quality stocks on every dip. The result: the stock market crash never ended it and it’s falling day by day. And I’m sitting at a loss of 10%.

But should I sell and book the losses and get out of the market? I entered the market with a long term perspective and that made me to stay in the market.

When I first started investing in stock I was a short term player. Whenever a stock in my portfolio moves up 5 to 10% I book my profits and some of them even jumped 50% in less than a month, I booked my profits. While some of them dropped 10 to 20% and I booked my losses and got out from the markets. I lost more money than I gained from the market. That made me to quit stock market. But I used to watch the stocks whenever I get time but didn’t invested in stocks for a long time, not because they dropped 20% or I booked my losses. It’s because the same stocks began to move up very sharply with the market in less than a month the stocks which I sold off were up by over 20% my acquired price. And in six months some of them shot up by 100% and some by 500% and some by 1000%. And I learned a great lesson!

Now, many of you might have actually lost their patience and sleep. The situation is even worse for me and others who entered the stock market in the past two months. Your losses could be anywhere between 10% to 50%.

But now I am not that panic or I have decided not to panic will continue to hold all my quality stocks.

1. Stop Listening To Stock Market Analysts

Almost all stock market analysts in the media confuse you instead of giving a solution. Some will say the market will move up from next month onwards and some will say we are in a bear market and so on. So stop listening to them as you wont get any relief from their words. Have faith in yourself! Peace and hope are all within you. It doesn’t mean to buy a stupid company and hold that for long. I suggest you to study the market thoroughly and do your home work and analysis. Pick stocks which are fundamentally strong and if some analysts are recommending the same stock then consider that as a plus point. Don’t buy stocks only because of someone’s recommendation.

2. Don’t Look At Your Portfolio Every Single Minute

Another big mistake investors make is that they used to track their portfolio every single minute and seconds. A fall makes then feel worse and a slight rise in stock prices makes them feel better or happy. But this should be discontinued. How about tracking the fundamentals of the company when they announce their quarterly results? If your company is growing - then be happy. If they are reporting losses continuously then exit from that stock. Sooner or later the prices of your shares will settle around its fundamental value. And please stop following rumors about fundamentally strong companies.

Suppose you hold a Fixed Deposit (or Certificate of Deposit) with a bank then would you look at its value daily? Absolutely no, use that same principle when you invest in stock market.

3. Be Patient

It’s very common that you invest all your money at once instead of investing the same in a systematic manner. So chances are that you running out of cash when the stock market corrects sharply. But even then be patient and continue to hold your stocks.

4. Speak To Actual Investors Who Have Experience

Instead of interacting with analysts or stock brokers, speak with real investors who have been in the market for long time and ask about how they have survived in the market and how they have created their wealth.

 5. Stop Following Crazy Tips By Others

Stop following Hot tips which promise you to make you a millionaire in months. Yes it could really be a hot tip for Billionaires who would end up as millionaires in case they do follow the tip.

6. Understand The Market Cycles

Every and every asset class has a cycle whether its Stock Market or Real Estate or Gold or Silver all move in cycles. Realize the fact that no asset class will go only in one direction. If you go back to its history then you can see several instances when stocks prices have actually moved up and down. But over the longer period of time every asset class will reward its investors.

Stock markets, mutual funds, real estate all move in cycles. Please realize that nothing can keep going up forever in a single direction. There will be phases when prices will come down and again move up. If you go back into history you will see several instances when stock prices came down, however over a period of time quality companies always reward investors. Understand market cycles, and don’t become a slave to them.

7. Follow The ‘Guru’

Warren Buffett is an American investor, businessperson and philanthropist. He is the richest person in the world according to Forbes Magazine with an estimated current net worth of around US$62 Billion. He known as the world’s greatest investor or “Oracle of Omaha”. If you are an investor then the Wikipedia article of Warren Buffett is a must read.

He simply invested in quality stocks which have some value for longer term. He invested in Gillette, for the simple reason that he believed that men won’t stop shaving. So it makes sense to follow him. He entered the stock market when he was just eleven. He bought three shares of Cities Service at $38 per share, and shortly after buying the stock it fell to $27 per share. But he held his shares and sold for $40 per share when it was rebounded. But he regretted for that as the Cities Services shares shot up to $200. So that taught him one of the basic lessons of investing "patience is a virtue".

Happy Investing!

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