Assume that you are watching a horror movie. Do you get scared? If yes, how many times you really get terrified? Not often! Because you know very well that it is a movie and not a reality. It is a drama. Secondly, not much is at stake, as at any point you can leave the hall and make an exit. Nothing to lose which you may repent later. Thirdly, the money to the extent of the movie ticket is only are at stake. Thus, you are into a dark tunnel wherein you know that the horror will continue not more than three hours. There is no uncertainty as regards to money and length of time is concerned.
Now creating an analogy with stock investments.
Stock market crashes. All the stocks are deep into the red. The fall is just not stopping. You know very well that good times will come, but when? How long the economic slowdown will continue? When your portfolio will stop bleeding? Past data shows that the recovery is almost equally sharp, but when will that pull-back happen?
Exit from the market is difficult, as it has incurred deep dent in your portfolio. Moreover, who knows the market may turnaround soon after your exit and you may be deprived of the potential gains? Thus, the current state is as if you are into a dark tunnel and you do not know when the tunnel will end. Still, there is no light visible, so as to indicate the end of the tunnel.
The fact is, no one knows when the darkness will end.
It has never happened in the past that the tunnel never ends. Also, whenever and wherever the tunnel ends, there will be brightness and the light will be so bright that you would have never thought of.
To give you an example, BSE Sensex gained 127% in 18 months post-1992 crash, 115% in 12 months post 1996 crash, 138% in 30 months post year 2000 crash, 157% in 18 months post-2008 crash. Thus, it was not the final outcome that created fear it was the uncertainty.
Concentrate on the brightness ahead and not on the present darkness in the tunnel.
Ensure that your portfolio is filled with rights stock, rest all will be taken care of sooner or later.
By A K Asnani
Author - Way To Billionaire
(This article was published in Smart Investment)