In my last couple of recent mails, I mentioned to follow Asset Allocation, not get swayed by rising markets and not to commit big money and chase markets, particularly mid and small cap space at any price. Now in the current backdrop I would like to bring the below updates to your notice.

Correction is markets are good. The good part is it did not translate boom to bubble. It makes people practically realize the way market functions. Particularly, to those who entered in last 1-3 years back had seen only one side of the rally with minor corrections.

One should always keep in mind that corrections and volatility is inherent nature of the markets. It is there in the past, and you are witnessing it presently and it will be there in the future.

There is always justification for the rise and fall of the markets. In the long run it is only earnings which will drive markets.
There are periods when markets move ahead of earnings and sometimes earnings move ahead of markets. Corrections help to adjust those variations.

Another important thing to follow is not to go by media of any nature. The main reason they change the narrative based on the market movements. And keep on highlighting things which will not have any significance in long term investing.

Mark Twain, aptly says that “If you don’t read the newspaper, you are uninformed. If you read the newspaper you are misinformed.

Some of you have been investing since couple of decades and seen worst of the falls in the markets. By controlling your emotions and being with right temperament and detachment made all the difference to ride the tide in a successful manner, without carrying by notional values in portfolio.

The same applies to current situation (where the fall is very insignificant. 2000 or 3000 points cut in index looks big in absolute terms. But it is just around 5-8% from recent highs )

I end with Physhologist Daniel Kahneman words ““If owning stocks is a long-term project for you,” “following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.