As of 1st Jan 2018, most of the stocks were having extremely high valuation that’s why I though it is Time to exit equity market and book profits.Many of us do research to identify which stock to buy and at what price.
Is it really time to exit equity market and book profits ?
When you know how to value a company, and what kind of return you are expecting from your investment, decide the buy price. If the current market price(CMP) is lesser than that price, you will go ahead and buy it. If the CMP is higher than the calculated buy price, be patient and wait for the correction.
The first bull market was from Sep 2001 which ended in Jan 2008(76 months) with biggest market crash of – 63%, which started in Oct 2008 post 2008 crash.
We are in the second largest bull market which started in Oct 2008 continuing till date (110 months), BSE Sensex has quadrupled gained with whooping 443.5% increase during this period.
It is almost always impossible to catch the bottom or top of the market, so the best thing to do is exit the market towards the top and enter the market towards the bottom of the market cycle.
The writing on the wall is clear; Inaction is our biggest enemy, it may cost us dearly. If your neighbor, who knows nothing about stocks, is suggesting you to buys a stock, its a sign that your should think about selling your investments and sit on cash to re-invest it once the market bottoms. Recently while I was in our pediatrician’s clinic, I heard his assistant suggesting the doctor to buy Infosys shares. I also stumbled upon an article mentioning that uber/Ola drivers are seen trading on their mobiles in their spare time. Next thing I did was, started selling my equity investments.
See this post to understand All about selling long-term equity investments