The markets have been volatile so far in 2022. The benchmark Nifty index, which started the year at 17,354 points, fell to a low of 16,842.8 before recovering to 17,034 as of close on February 17, 2022. This volatility in the market was driven by fears that the omicron variant of COVID-19 could wreak havoc on the global economy and supply chains.
However, that did not happen. The world is slowly recovering from this wave of the pandemic and economies are back in business. Markets are also steadily recovering across the world.
Investors can tend to panic when markets are volatile. One study from MIT showed that older men and married men were more likely to panic when the markets turn volatile and unload their investments. However, younger people are also susceptible to panic selling. The MIT study also noted that panic selling was a distinct behavioural pattern in finance.
Markets are risky, there is no doubt about that. Every investor must look at investment carefully before they make any decision about it. Whether they are looking to buy a stock or look to exit an investment, they must carefully research all aspects of that investment before they take any action on it.
However, market volatility should not be the reason why any investor must sell any stock or mutual fund. The equities market is always volatile. In fact, since the year 2000, the stock markets have crashed nine times. That includes the crash of 2008, during the global financial crisis, and the crash of 2020 when the world was under the grip of the COVID-19 pandemic.
The markets have always bounced back from these events and have only gone on to post record gains. Take 2021 for instance, after the crash the previous year, the Nifty gained over 22% in 2021, one of its highest yearly gains recorded. In 2021, The Nifty breached the 17,000 mark for the first time as well. This shows that slowdowns and crashes are a normal part of a market’s lifecycle and investors really need not panic about it.
Savart always preaches this creed. We believe in staying invested over the long-term and we advise this to all our investors. Market volatility is just a short-term phenomenon, and the stock market has always shown that those to stay invested for the long term can make enormous gains. Any investment in equities over the long term has given investors stupendous gains, this is a fact across geographies.
For those who wish to exit the market in the short term, Savart offers a different kind of advice, one that is less risky, with assets such as bonds and debt funds. These assets give good returns over the short term but are not as good over the long term. If you are an investor who wants to invest only for a short amount of time, or you have a short-term financial goal to achieve, we recommend you stay away from riskier assets.
To know where to invest in whether for the short term or the long term, you can take Savart’s help with sound investment advice on investing from Savart. Our proprietary investment research system, Vantage, will crunch the data for you and bring to you the best investment portfolio that suits your lifestyle and financial goals. To get such customized investment advice delivered to you, reach out to Savart today! You can also download our app from the Google Play Store or the Apple App Store. For a detailed explanation of how to use our app, watch the walkthrough video here.