Investing is Awesome during Recession–Prevent Losses and Invest Intelligently
An individual invests for securing own future and that of the family members. Diversification in the portfolio is the key issue but it has to be done with right judgment. The subject of investment is governed by well-established norms, but the stock exchange is notorious to cast aside such norms and to take its own course. Sometimes the market turns extremely volatile for strange reasons, for which there are no precedents. Many segments of the industry tumble and it happens in short-time duration. In such exigencies the main concern of the investors is how to cut losses!
Retreat to advance:
In times of war, the army sometimes withdraws to prepare for fresh attacks. When the share market beats your calculations, and plunges down, it is better to stop and watch. Make an immediate review of each and every share, segment of industry in which you have stake, make fresh provision of cut loss limits for each one of them in the changed scenario. Be not sentimental in shifting the strategy and do not cultivate fascination for the share of a particular company on imaginary grounds. The decisions will have to be fast, to avoid huge losses.
Broker can still be the guardian:
Even during recession, rely on the advice of your trusted broker. He is not responsible for the state of affairs in the economy and falling of the share prices. No one is in control of the situation that happens once in decades. When the Finance Minister of the country or the Governor of Central Bank is unable to check the downward economic trends, what can a broker do? Be wary about the articles in economic and commerce journals, some of which may be written with motivated objectives, just to provide shot in the arm for a particular segment of the industry or a particular company. When the market is volatile during recession, the established norms of investment will go through a testing time. Even in such conditions there are some winners, but the number of losers is more. Your experience or the experience of a broker, who is an old guard and who has sailed through recessions in the past, will count a lot. He will most probably tell you to stick to such companies known for integrity and transparency in management.
In times of crisis, consider the share of a company from all angles, and in it may be safe to invest the amount in one company than split it up with several companies. Your sixth sense should come to take the centre stage to cut losses.