Synopsis
In October, the bears made no distinction between large-, mid- or small-cap stocks β mauling them equally. The market behavior during the month underlined the importance of adhering to the basic principles of equity investing. First, remember that when you buy a stock, you own part of a business β and how the business is doing is more important than any movement of the Nifty. Second, if you are a long-term investor, a month of selling should not bother you. It has happened in the past, and will happen in the future as well. So, keep your focus on the business underlying the stock. Check for changes in the environment, and whether they are positive or negative for the business. Last, but not the least, do your homework before investing β not after investing.
The mayhem in the market all through the month of October may appear to be unexpected. But hindsight tells us that there were β and still are β many signs indicating a phase of high volatility quotient, with a bias toward bears.When it comes to volatility, there are four factors that need to be considered. These are: Magnitude of volatility, frequency of volatile movements, the sectors involved, and, finally, the overall market breadth during a
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