10 things to learn from past market corrections

 

1.       All markets are highly correlated when the market falls. Thus diversification may not reduce your risks too much ! 

2.      It's human beings who trade in shares. So fear and greed drive the market much beyond fundamentals.

3.      The correction may cont get  over in a day or two. It can  be deep and painful. It will test our conviction.

4.     Currencies may correct alongside stocks . Thus the dollar returns on emerging market equities will suffer on both counts .

5.      Reduce leverage; margin calls and stop losses may deepen the correction. 

6.     Have the courage to buy when other sells :  Down one year someone will say we should have bought those good stocks when it corrects much beyond its fundamental value. 

7.      Everyone is a great stock investor when all shares goes up my every day. We have to control our emotions. Overcome greed and panic to become a successful long term investor.

8. We do not market we buy stocks . Understand your investments and buy when  you  see value. 

9 . In the long term , historical returns from equity has been much higher than fixed deposits.

10. Panic and Euphoria are the two enemies of Investors . Traders should have clear stop losses for their trading positions.