What Goes Up Must Come Down :
This idiom came from the physical properties of gravity, but holds true for the equity market too. During calendar year 2017, BSE Smallcap index rallied nearly 60 percent against a 28 percent rise in the Sensex. In 2018, the rally reversed, and the BSE Smallcap index declined 23.53 percent against a 5 percent return on the 30 pack Sensex.
Say No to High Debt Companies :
One needs to understand the business model and its fundamentals before investing in a stock. This is important because whenever the market corrects, companies with high debt and limited resources are impacted the most. Therefore, one should always avoid such businesses. ADAG Companies are the best examples of high debt mess.
Don’t put all your eggs in one basket. Diversification is the primary means of managing risk by mixing investments like equities, gold, bonds and real estate in your portfolio.
Keep Faith in Your Skills
Market participants made a quick buck in the stocks rally of 2017 and left their full time jobs to tap the opportunity in stocks. Those people suffered the most in the current downfall of 2018-19.
One should keep buying fundamentally strong companies in a staggered manner for the long term to benefit from volatile market conditions.