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FOMO ? You are not alone !

Lot of clients now enquiring about buying GOLD in electronic form. This fits perfect in the theory of FOMO (Fear Of Missing Out). Retail Investor always runs towards the Assets which are moving higher. Be it Gold, Equities or Real Estate. But sadly they always end up getting stuck as they don’t understand a simple rule of any market i.e You have to buy an asset when nobody is buying on the back of some rational analysis not when it has already run up.

The scenario never changes, never ! When we were saying that Pharma is showing signs of reversal even if it is going down on price, nobody believed. Every single person who listened to this idea rejected it, even the people from Pharma Industry. Pharma is up almost 45% from the lows made in March 2020 & is poised to move up in coming months/years as well.

Same goes with Gold, In January 2019 we gave a buy call on Gold when it was at 31000 for a minimum target of 38000 & then further upgraded to 45000-48000. Not a single client called for buying Gold, simply because Gold had not performed in last 6 years. Good is up 50% from that levels now.

Same story is being repeated again in equities now. Everyone is now disheartened & distressed about the recent fall in markets triggered by Covid-19. Lower & lower targets can be heard everywhere for Nifty/Sensex in coming months/years. Nobody is interested in buying at any levels. What they have forgotten is that if they have a goal which is 5-10-15 years down the line then they are experiencing the blessing in disguise in current situation.

There are two ways to look at the portfolios as on date –

1. Person A is looking at the Portfolio already invested in equities/mutual funds which is down substantially after the fall. He is so depressed by the fall in portfolio value that he has no vision left to see the opportunities in markets at these or lower levels.

2. Person B is looking at the valuations of the markets at which now he will b buying through his SIPs & Lumpsums. He is not at all worried about the fall in portfolio value as he understands that volatility is the major characteristic of equity investments & volatility means both down moves as well as the up-moves.

Who is a better Investor, A or B ?

Well many people may have varied views about this but the fact is if you are concerned about the falls in markets then you actually have not understood the markets & equity investments very well. There are no free lunches, same way to get higher returns in equities one has to pay a price & that price is time, patience & wisdom, wisdom that without seeing the down moves, there is no way you are gonna see the big up-moves. Also if you are not happy that markets have fallen steeply in initial years of Investing then you don’t understand the concept of averaging & compounding well enough.

Time & again we have seen that equities have delivered pretty good returns if you are in for a decent time frame & have followed some discipline while Investing. I find no reason for it to change, in-fact with rising population & globalisation of economies this seems to be the best investments for future.

One more thing which I want to share with my experience is that never relate the markets with what you are seeing/hearing in news & social media. Markets are the smartest among us , they are in for tricking us always & whatever you are hearing in news has already happened & markets rarely react to which has already happened. Infact the smart money exits when retail money enters the markets on the back of some good news & vice versa. You can notice this on various occasions in markets.

A few examples

1. When first time the news of 5% GDP numbers came everyone treated it as a very bad news & predictions of market corrections started floating around whereas that was the bottom of markets & markets rallied to new highs in next few months.
2.First Covid-19 case was reported in China in December 2019 but markets did not start falling until the end of February 2020. It was virtually impossible to predict that there will be a fall & that too so steep.
3.In current scenario everyone is amazed at the strong pullback in markets from the lows made in March 2020 that too without any positive news around the corner, infact there is only bad news, the number of corona cases are rising day by day & there does not seems to be any relief in sight as of now. This has confused investors & Iv started to see FOMO in many investors about the markets going up.

So you see there are numerous such occasions when markets have moved exactly opposite to the ground realities. I also want to make a bold prediction here, In my view markets are gonna top with a very good news. i don’t know the news but it may have something to do with government giving a huge stimulus or so. The day this kind of news comes, that day/week will be the last day of rise in the markets & we will start moving downwards from there. Although I would be very happy if Im proven wrong here, just for the sake of my investors.

Bad news bring good investment opportunities to those who see beyond just bad news.

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