Curated By: Business Desk
Last Updated: October 27, 2023, 20:25 IST
Warren Buffett suggests in a bearish market take advantage of the situation and buy.
Breaking the six-day losing streak, benchmark indices, BSE Sensex and Nifty50 closed with gains on October 27 backed by gains in realty, energy and financial services sectors.
The Indian stock market traders were fearful of their futures after both the Sensex and Nifty closed lower for the sixth consecutive day on Thursday, October 26, 2023. Yesterday, the BSE Sensex fell by 900.91 points, and the National Stock Exchange’s (NSE) Nifty50 dropped by 264.90 points. Investors incurred losses worth Rs 2.9 lakh crore due to today’s decline.
However, breaking the six-day losing streak, benchmark indices, BSE Sensex and Nifty50 closed with gains on October 27 backed by gains in realty, energy and financial services sectors. While NSE Nifty closed 190 points or 1.01 percent higher at 19,047.25, BSE Sensex closed higher at 63,782.80 with a gain of 634.65 points.
As the investors remain worried over recent market volatility due to global uncertainties, many wonder how to avoid losses during a market downturn. Well, the tips by veteran investors like Warren Buffett and Howard Marks can not only protect investors from losses but also potentially yield profits.
Warren Buffett’s mantra is, “Be fearful when others are greedy, and be greedy when others are fearful.” This means that when other investors are rushing to buy, exercise caution in your investments. However, when the market is in a downturn and people are selling out of fear, take advantage of the situation and make purchases; instead of being fearful, become greedy.
According to famous American investor and author Howard Marks, the three points to remember while investing during a stock market crash are:
1. Fear of Loss Leads to Greater Loss: The renowned investor suggests that there could be many valid reasons for selling, but if you make the decision to sell solely out of fear of making a mistake or incurring losses, it can be very detrimental. The decision to sell should be based on solid financial analysis, strong conviction, and disciplined investing. Marks emphasises that fear, panic, and psychological beliefs have no place in investment decisions.
2. Don’t change your portfolio rapidly: Marks also advises that if an investor frequently changes their portfolio in response to rapidly changing market conditions, they are unlikely to achieve profits. Therefore, investment decisions should be made not based on market conditions but after thorough and rational evaluation of fundamentals and circumstances, not in haste or panic.
3. Learn from others’ mistakes: Marks believes that successful investment decisions are often made by observing the mistakes of others. If someone is selling out of fear, their mistake could be an opportunity for a true investor to buy.
The recovery in key benchmark indices on Friday could be a good sign for investors. However, it’s crucial to note that the market conditions are uncertain and favourable situations could alter in the future. As investors and market experts remain cautious over uncertainties due to global factors, Warren Buffet and Howard Marks’ advice could be helpful in avoiding losses.
