Markets have and are correcting ferociously in 2018. These market corrections are giving tough days to equity investors. No? Then you have perfected the art of equity investment. If yes… read on because I think Market Correction is a time you may check whether you are on a right track of investments or Not.

Last week after a weak Monday closing,  a remark by equity broker/trader community on social media was “thank god it’s 2^nd October tomorrow and markets will be closed. Gandhi Ji ney bacha liya… (Thank God It’s a holiday due to Gandhiji’s Birth Anniversary)

Similarly, on 5^th Oct, after Monetary policy announcement at 3 pm & the market went down, many brokers & investors were praying that clocks run fast and let markets close at 3 30 pm.

Monday or day after a holiday means a lot of tension for most in equity markets. Market Corrections is a time … many lose sleep, appetite, exercise & even quality time with family.

Will it matter in long run?

Isn’t this absurd… you invest (no forcing takes place), then you sort of try throwing it away!

Market Correction? Fear? Panic?

Of making a notional loss or losing a few bucks in valuation.

Many of you are thinking to come out of equity markets and re-enter after some time. Do you know that time? History has proved that investors who have held have earned more than people who withdrew in panic and again re-invested thinking that they have made a smart move.

Let us address this fear of market corrections today!

Just answer following questions?

• Did you invest for returns or your goals achievement?
• Have you been assured some kind of fixed returns?
• Did you assume or were told that capital or your last day’s profits will be protected?
• Your planner must have done a risk analysis of the amount of equity you should hold in your overall asset allocation?
• Were you made aware that markets have fallen more than 10% more than 40 times in the last 38 years?
• Were you told that you will make money every year in equity in the short run?

If the answer is yes to any one of the questions above you need to check again your priorities, your expectations with equity investments and understanding of equity investments.

So, if the answer is NO… then your fear is just an emotional outcome.

How to use these market corrections?

Use this correction as we do in a fire drill.

A fire safety drill is an activity where, the participants, assume that the event (fire in this case) has happened. They act what they should be doing when there is a fire in the building.

The steps to follow, check the equipment (extinguisher or sand buckets), signs for the safe exit, place of assembly are all reassessed to know one thing…the readiness if the fire strikes.

Can you take market corrections as a fire drill activity?

Yes …

Just visit following things again a few things if you are UNCOMFORTABLE with the CORRECTIONS:

• Did you do a goal planning exercise? If not, do you even know why are you investing?
• If you know equity is for long-term plans (5 years plus), why are you in the state of shock?
• Have you have invested FD monies in equity or hybrid or debt fund thinking they are same?
• Are you handling equity only for returns? Think again… yes, you are at a right place but you need to deal it just like you do with a long FD or Property… Buy and Sit Tight.
• Were you risk minimizing strategies were in place? Were they implemented? I am talking about Diversification, Risk Assesment & Asset Allocation?
• Are you in a pressure to perform well in your investments? If you have missed a bus in past, there is no way catching it by running fast. You can make your own bus!

Correction is a time when you should execute the drill in real life scenario. It’s a forced drill, but make the best use of it.

This drill can help you to:

• Know your appetite for equity.
• Know how equity works in real life.
• Plan if you are still investing like a dart game.

Websites and blogs will be full of reasons like currency, scam, CAD etc or steps to minimize the panic or how to deal with the situation. But is it even worth taking tension when returns are out of your control in the short run?

My suggestion would be to revisit your priorities.

If equity is giving you sleepless night or anxiety, you have not understood it or you are not ready for it. You are taking more risk than you can handle. And, before you point a finger at me… I am 90% equity & 10% Debt invested still enjoying my sleep.

Please share your steps of readiness when the market corrections occur.

Also, spread this article so that your friends know that you read good things.