The sharp swings in the market strongly underline a lack of direction. Investors have been caught off guard too many times in the last two weeks.
First, the vertical rise in precious metals sent investors scurrying to buy them. Peak FOMO was playing out. Friday night saw precious metal prices turn turtle. Then, the budget day trade left the stock market in deep anxiety. Monday was a surprise to most investors expecting a sharp dip. The trade deal announced on Monday night took the markets near the index’s all-time highs. Investors panicked to cover their short positions. But, the market didn’t really follow through on Tuesday’s rise after that.
The week saw a sharp correction in the cryptocurrency market. Silver rose sharply by 20% from the week’s low only to give up all the gains. The trade deal announced with the USA seems to have only triggered a short relief rally which failed to demonstrate strength.
The markets kept throwing opportunities in select pockets to sell. Investors could have exited or even pared their exposure to reduce their risks in an expensive asset classes like precious metals. This would have also given them capital to buy a more attractively valued asset classes like equity. Investors who capitalise on these kind of opportunities will be in a position to buy when they find undervalued investment opportunities. Investors who chase expensive assets at the wrong time will spend extended phases of time ruing their behavior.
This is a time to Sell Decisively and Buy Selectively. Getting both the selling and the buying right is going to be every investor’s biggest challenge. Those who succeed at this will be big winners.
