What to do when the stock market crashes?

Podcast Duration: 05:24

Hi doston! Angel One ke is podcast mein aapka swagat hai!

Doston stock market mein upward aur downward movements toh chalte rehte hain. But what do you do during a stock market crash? It's not easy to sit through one, lekin last year jab sensex crash hokar 40% se zyada fall hua, tab most investors evidently didn’t find it easy to respond to the crash correctly.

My friend Karan was recently telling me about his discussion with his colleagues Priya and Shikhar, who had been investing in the stock market for over five years now. Both of them had a hefty sum of savings linked to the equity market through mutual funds, and stock purchases. Lekin pichle saal ke stock market crash ke baad one of them emerged victorious and another one of them emerged with losses of a lifetime - well to be precise, five years.

Can you guess ki bahut similar investment profiles se itne different outcomes kaise aaye honge? Doston we are here to find out exactly that. Lekin in this process, main aapko ye bhi bataane jaa rahi hun, ki stock market crash ke samay aapko kin 3 cheezon ko hamesha yaad rakhna chahiye.

Let's start with number 1 - and that is, to stay calm. Doston stock market crash ke samay ek experienced investor never loses their cool. In fact, agar aapko stock market mein calm rehne ki sabse zyada zaroorat hai, toh woh hai stock market crash ke samay par. Because agar aap stock market indices ke historical charts dekhoge - and historical se mera matlab hai 30 se 100 years ke timeframe mein - toh aap ek common trend notice kar paoge. And that trend is of the stock market’s recovery after every crash. History mein kai financial crises hue hain, aur sabhi crises mein zyada tar investors ne long term thinking demonstrate nahi ki. And one who looks at the long term always knows ki stock market crises are temporary setbacks, and the curve will move upwards again after the storm has passed.

Waise, Priya aur Shikhar ke stock market experiences ke baare mein aap curious ho ya nahi? I was! Next point se aapko clear hoga ki how things turned out the way they did for these two seasoned investors.

Point number 2 - Never sell. Aur agar aap ek experienced investor ho, toh point number 2 aur point number one mein aapko koi difference nahi dikhai dega. Kyunki stock market ke crash hone par investors sell tabhi karte hain jab woh panic karte hain - that is, when they have lost the ability to stay calm. Lekin what you should actually do during a crash, is to sell - only and only if you desperately need money. Waise toh aise emergency situations ke liye aapko emergency funds set up karna chahiye. Lekin if you need that money anyway, then withdraw only as much as is utterly necessary. Aur ye paise sirf emergencies ke liye use kiya jaana chahiye. In other words, if you can go without selling the stocks you own, then you should never - and I am repeating this for you my friends - never do it when the market is down.

In fact, stock market crash ke baad sell karna - can be the worst deal that you will ever make on a lifetime of savings. Kyunki ek crash ke samay par most stocks have touched their lowest prices. In fact, kuch stocks par aapke investments might lose even fifty percent of their value. Lekin - and this is where the first point comes handy - if you stay calm, then these stocks are likely to bounce back with time, and you will be able to recover both your value and gains on the stocks once the economy has recovered.

Priya aur Shikhar ne is point par bahut different decisions liye. Shikar ne panic karke apne portfolio ko sell kar diya. He basically exited his investments with more than 20 percent losses on five years worth of savings. Simply because he panicked in the heat of the moment. Priya ki story sunkar he was astounded, and really regretted his decision later on. You’ll see why.

Let’s move to point 3 - and that is, to buy the right stocks. Doston stock market ke crash hone ke samay par you will find most stocks at their 3, 5 or even 10 year lows. This is a good opportunity to buy some stocks at some of the lowest prices. Aur agar aap ek experts ke trading behaviours dekhoge, toh you'll finally start seeing stock market crashes as opportunities to make some of the smartest money moves in the history of your trading. Kyunki one year later or two years, recovery ke samay stocks do bounce back. But even if they make it to their levels before the crash, you will be in some thick profit margins. This is precisely what priya did. Uske paas apne bank account mein kuch extra cash tha. And she used this to buy some stocks and index funds. Jab stock markets recover hue, toh she not only regained her profits on her original investments, but also made some hefty profits on her new positions.

Doston stock market crashes ek rookie investor ke liye worry karte hain, lekin experienced investors ke liye ye opportunities ki tarah nazar aate hain. Cool, isn’t it? To become a pro at your game, don’t forget these three mantras of sailing through a stock market crash.

Doston, aaj ke podcast mein bas itna hi. Main chalti hoon kuch stock market news dekhne ke liye. Fir milenge next podcast mein. Tab tak ke liye, Angel broking ki aur se alvida - and happy investing!

Investments and the securities markets are subject to market risks. Read all the related documents carefully before investing.