Buy it and forget it, say stock market veterans

Staying calm in a fluctuating market seen as the best strategy.

Did you buy stocks this year, but lose money during last month's correction? Are you wondering whether to sell it all off before the markets go down again? Are the market movements robbing you of your sleep?

Don't and don't worry, say some of the regular retail clients on the rolls of Mumbai brokers. While the market may fluctuate wildly, they swear by the adage, the best investor is the calmest one.

"The biggest mistake committed by retail investors like us is that we invest towards the fag-end of the bull-run, lose a lot of money in the correction, but always get out with marginal gains before the next bull-run has hardly begun," says 40-year-old Ashit Doshi, who runs a family business in adhesives from his office in Breach Candy.

Doshi, like most other successful long-term investors we spoke to, believes in being an all-weather investor and does not think much of people who jump into euphoric investment when stock market returns start making headlines in the media is full of stock market movements.

"I have invested for 15 years now and as long I observed just one rule, I have always got a compounded return of around 15 to 18 per cent a year," he says.

His only rule- don't buy something you don't know about. "There will be times when a big fall in the market tempts you to sell off everything you have at one go, but never lose sight of the fact that your story is with the stock, not with the market," point out the business-man who keeps away from IT-stocks because he does not "understand what they do."

Vijay Hede, a 54-year-old businessman from Panjim, Goa, too agrees. "While you don't of course have to spend all your time watching the markets, investing is a job, even if a part-time one. You have to be comfortable with researching companies, if you are not, then stock markets is not the place for you," says the 30-year-old veteran of the markets.

"There was time, only a few years ago, when the stock of Sesa Goa was going for Rs 58. I bought a lot of them because the company is just next door and I knew what they were doing.. what their business was, I knew the people who were running it... In short, I knew that there was no way other than for the company to do well. Today, the stock is trading at Rs 2,500. That is how well you need to know your company," he adds.

However, there are also who have done well for themselves without having to become experts on any company. "The biggest lesson I learnt was to be careful about whom I took advice from," says Dr Renu Diwan, a practising Homeopath from Babulnath in South Mumbai, "even your doodhwala will tell you which stock to buy!"

Diwan, an investor of 10-years standing, has a simple approach when it comes to taking stock tips- trust only the professionals. "I trust only Radhika (her broker.) When she calls me and tells me that such and such stock is a good buy, I buy. When she tells me one of my stocks ripe for selling, I sell. I don't listen to anyone else. For stocks, it is just 'buy it and forget it,'" she says.

Her wisdom, of course, did not come cheap for her. "There was a time, I think it was in '92, when I used to invest on tips. Some of my friends told me that NIIT was hot, so I bought it at Rs 2,700. Finally, after much waiting, I had to sell it off at Rs 400 or 500," she remembers.