Set your EGO aside while Investing!!

Time flies by and from a market which was booming at large since past few years, suddenly one starts feeling the nerve and the market breakdown seems nearby. We are humans, and we tend to react to emotions. The extremes of greed and fear will undoubtedly prevail, and one will have to deal with it. There will be extremism and still investors will be coming in hoards and when the chips go down.
I met retired defense personnel who seems to be quite of an optimist way back in 2016-17 and why not the market was moving in leaps and bounds, and his overall portfolio valuations were in double digits, and he was quite ecstatic about it. On an evening when we were discussing the markets and how will the tide turn in the next couple of years, I was quick to respond go slow on your overall small-cap and mid-cap exposures if you are looking to redeem in the next 24 months. To this, he reacted with quite an optimism. He said buddy the next 36 months the market would grow at the rate of 15 to 20 percent p.a. I won’t blame him for the utter optimism that a bullish market creates on our senses.
Most of the times, we forget about the very basics of investing. The period for which we would want to stay invested in the market. The second one – what do we want to do with that money? You would say what kind of question is that? I would say do you have some goals in hindsight like in his case – a corpus for your grandchildren, a vacation in a few years, etc. etc.
Why don’t we get mean when it comes to our money? Why not what’s wrong in that? In a bullish market, we start chasing the best and only to find ourselves gasping for breath, we get ecstatic with the double-digit returns and start pumping in more money into the market only to feel sorry when the market turns its ugly head. Same was the case here, after around two years the same person had been calling me frantically and asking for suggestions as to what should he do with his mid-cap and small-cap investments which are at minus 30 percent? Desperate times call for extreme measures but will that help him now when he is in urgent need of this money.
I am not here to provide solutions to anyone in this write-up, but then the idea that I am trying to draw is for every other investor to understand few basic things before putting in your hard-earned money in the market. Set your emotions aside, stay away from your EGO as it will lead you to a road of Nowhere. Till then Happy investing.

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