Synopsis
However rational one might be, a new flash which shows Japanese indices, Nikkei down by 11% and Taiwanese indices down by 8% is bound to make you look at your portfolio value and get jittery. When one sees that value in red, two things may happen. First the urge to buy stock because you feel that correction is a buying opportunity. Second, question the decision of holding the stocks and sell in panic. Now markets are / were and will remain volatile. But decision making cannot be volatile, it has to be based on what business you will own after you bought the stock. Whether you are going to own a business which is growing or not, whether the management is transparent in admitting its mistakes, take care of your rights as retail shareholders. Let the economist fight on whether the US FEd is wrong and right, focus on what you own and if you own a bad business, even if you are sitting on gains, just sell and if you own a good business ignore the volatility and India VIX.
When markets are volatile what is better to do ? Look at what happened to the yield curve of US bonds or the company which has raised money which was financed through Yen carry trade, last but not the least, a company which has declared a dividend after a gap of two years and is the third company in that sector which has announced a better than expected dividend. Mind you we are not talking about better earnings, we are discussing higher
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