The current market decline has seen the marquee indices shed a lot of their value in the past few weeks of trade. Even as we start the new trading week, the Indian indices continue to be on the path of greater decline as they enter what is being dubbed ‘Correction Mode’.
First Real Market Correction
This has resulted in many investors panicking and leaving or abdicating all the equity market-related ambitions altogether.
Zerodha’s CEO, Nithin Kamath, who had previously highlighted ‘degrowth’ in the segment, has once again cautioned against panicking in this time of a free fall in the markets.
In a post on X, Kamath presented the case study of the pandemic years, ie 2020s.
In his post he said, “For investors who started investing after the pandemic, this is the first real market correction. Markets are cyclical, and given the way our markets went up from late 2020, this fall was inevitable.”
Kamath further claimed that there has been an uptick in the total number of investors dropping their Systematic Investment Plans or SIPs.
Aim For Long-Term Success
As per Kamath, this approach is ill-advised. Kamath claimed that an SIP helps investors do is to average investments across different market cycles.
Kamath further added, “You averaged on your way up from 2021; now, you get to average on the way down. In 2020, large, mid, and small caps fell by 25-40 per cent but then rose by 200-400 per cent. If you had panicked, you would have missed the rebound. As long as you invest regularly in the right funds, diversify, and stay disciplined, your chances of long-term success are high.”
‘Do Not Panic’
Kamath asked the investor to avoid leverage. He said, “The other mistake to avoid is leverage. There’s no shortage of businesses triggering you to borrow money to invest, etc., but that’s a bad idea.
Kamath added, “You are better off just investing every month and doing something useful in life than getting carried away by the doom and gloom. If you are new to the markets and are feeling nervous” |
Kamath also spoke about those who are margin trading and have borrowed to trade. “I’ve no idea where the markets go from here, and neither does anyone. What I do know is panicking now is the wrong thing to do, and you can get pushed to panic if you have borrowed.”, the Zerodha boss added.
Kamath added, “You are better off just investing every month and doing something useful in life than getting carried away by the doom and gloom. If you are new to the markets and are feeling nervous”
