"Is entering equity market safer in this volatile market?" This is a tough question that is dogging in every small and retail investor in Indian market. Many feel under the current circumstances markets are not a good idea any more.
One decade ego, investors used to invest and forget about the scrip for many years, but now the term " long term" definition has changed from 5 yrs and above to 12-15 months in average. There is so much uncertainty and volatility that it is difficult to predict the direction of market.
When there is so much confusion, one should calm down and keep in mind one's own objective in mind. If the objective is to trade well, one must be willing to take risk vs uncertainty and must be willing to take the consequences. But, if one is an investor, which ideally one should be, then picking up fundamentally strong stocks is the perfect thing to do.
Fundamentals never go out of fashion. New theories to assess market could come up. But, the way we analyze one scrip would remain the same. Fundamentals means, asset quality, healthy earning, management, past track record, debt undertaken, cash balance and above all reputation.And once fundamentals are in place, five year time span would be the best long term time measure.
Staying out of financial market in a view of uncertainty is not going to edge against inflation. The chances of loosing money would remain 20% and gaining 80%. So, one should stop worrying about 20% loss when one has potential to gain 80%. The average would still be better than not loosing or gaining anything. Yes, one should diversify one's total asset. For a young investor with ample time to invest and higher risk taking ability, one should not fear to enter equity market.
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