The stock market hit the 50,000-point mark a few days earlier, though it tanked later on. In such times, investors frequently end up believing that they might lose the big chance when others would win. In an interview with Mint, Bajaj Capital Chairman and Managing Director Rajiv Bajaj expressed his views on strategies to deal with “the fear of losing out” or the FOMO element while investing in equities. The concern with the FOMO aspect is that one ends up spending at the top much of the time. What follows is a time of fear, heartbreak and loss. Reaching the mark of 50,000 is only a number. When the index scales a certain sum and vice versa, one must not get exuberant. A slave to company profits is the stock markets. After six-seven years of a declining corporate earnings cycle, we conclude that we are about to turn the corner. This is what has contributed to the sharp re-rating and, ultimately, the growth of stock markets. Ideally, investors should see such occurrences as an incentive to review the distribution of their funds and the consistency of the portfolios they keep. The preference between lump sum and phased investment by SIPs or systemic transition plans (STPs) should be influenced not by the form of the investor, but by the stock markets' predominant context. Investments can be phased by SIPs or STPs as stocks have risen dramatically, show signs of exuberance and are costly. In the opposite, lump sums can be spent when stocks have sunk sharply, show signs of gloom and are inexpensive. In the current sense, markets have increased a lot in 10 months, showing early signs of exuberance, an uptick in the number of Robinhood traders and looking pricey all-time high figures on the trailing price-earnings ratio. Planning for investment continues with asset selection. You need to consider the risk appetite, investment horizon and target to arrive at an acceptable allocation. You ought to think about whether to invest in security collection and how to invest if you have an acceptable asset distribution. When investing in equities, it is easy to fall victim to the FOMO effect, especially when the increase in markets has been this sharp. The concern with such behavior is that one ends up spending at the topmost of the time. What follows is a time of fear, heartbreak and loss. An investor in the grasp of FOMO could be supported by two strategies. One disciplined and phased spending as it averages the purchasing rate, thereby reducing the risk. Two, savings in dynamic asset allocation funds with a lump sum. These are hybrid funds, investing in a combination of equity and debt, focused on time-tested valuation-based techniques in the markets at that time. This suggests that the trader should not care about the market's short-term fluctuations.
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Tags : #EquityFOMO #StockMarket