Are the late entrants safe?

There was a time when people wanted to sell everything including the pants and shirts they were wearing to invest in stocks in order to get the quick and massive returns it offered. This story held good till the late November or December 2007. Then came the downturn.

Prospective investors started investing in the stocks following the mantra “INVEST AT EVERY DIP”. What happened after that? They are yet to see the real bottom of the market. More and more innocent investors still buy stocks, albeit in small quantities, hoping that they would get a decent return once the market recovers. Yesterday’s rich man became today’s poor man because of the sudden and continuous downtrend in the market.

The dawn of the New Year 2008 was not good particularly for the stock traders. Almost all the wealth created during the last quarter of the past year (2007) was wiped out because of the recent downturn in the stock market. The erosion in the wealth was not confined to any single stock. It was fairly uniform covering all the fundamentally good stocks and fly by night bad and artificially boosted stocks.

The moral : Are the late entrants in the stock safe? No way, until you know when the market stops moving southwards and consolidates. Till such time, you will continue to lose your wealth. So do not make fresh exposure.

Can I off load all the stocks now I have?
That’s not advisable at this stage because once you sell it, you will be in a piquant situation when the market recovers. Wait and watch…