There was a wildlife video which went viral on the internet recently. It had a herd of Wild Dogs trying to hunt down a few Klipspringers (antelopes).
Wild Dogs are known to be the most ruthless hunters in Africa. They hunt in packs and the moment they catch their prey, they rip them off into pieces – usually in seconds. (There are quite a few videos on YouTube).
Before we get into the stock market lesson, do watch the video. (Safe video, no blood or gore)
If you are wondering what is the stock market lesson that we can take away from this.
There is plenty.
Especially during these times of uncertainty when Russia and Ukraine are involved in a war and the markets are falling.
We are living in uncertain times:
- There could be a World War 3 – as Russia intensifies its war on Ukraine.
- Inflation is high – you are actually losing money by keeping it in the bank, as interest rates are lower than inflation.
- Cost of living is increasing every day.
- All of this has come at a time when the world hasn’t yet recovered from 2 years of pain caused by Covid.
To be invested in the stock market at a time like this is extremely difficult.
So, what is the best thing to do? Should you sell everything, exit the market and keep the money safe in the bank? Or should you buy more shares?
Just like the antelope in the video – the best thing to do is nothing. The Wild Dogs are like all the bad news which are floating around. They create great fear in the minds of an investor.
If the antelope had done anything in panic – it would’ve ended quickly. Instead, all it had to do was maintain its composure and just stay in its place. The Wild Dogs came close, but eventually lost patience and left.
The antelopes survived.
Ask those investors who sold in the March 2020 stock market crash. The market hit a low on March 24 2020 – on the day when lockdowns were announced across the world.
Since then, even though Covid cases increased every day – the market was rising and when Covid was at its peak – the market was hitting new highs.
Those who sold, never got a chance to buy back.
But ask those who were strong enough to hold. They enjoyed one of the biggest bull markets the world had seen in a long time.
During times of great uncertainty, when everyone is panicking. Remember this:
- Good prices always come when uncertainty is at its peak.
- Buy if you have the courage. If you buy always buy in parts, we never know the bottom.
- When there is bad news and uncertainty all around – it is never the right time to sell.
- And finally, the best thing is usually to do absolutely. Times change, good times will be back again.
Always remember, any decision taken in panic will result in regret. This has been the biggest learning for me in the stock market.