The past month lived up to the wild card prediction “Sell in May and go away” for market traders. But, investing needs a very different mindset. It requires us to do things very different from what traders do. The time to build new positions, scale up existing positions at more attractive levels, and start contrarian bets in places witnessing extreme panic is exactly when traders are routed.
Investors thrive under such situations where traders bale out. From global trends, we are likely to witness an extended period of volatility with regular spikes in fear. This means that we could see more such phases of trade as we did in May.
Preparing for the next phase is critical. Usually, the spikes in fear happen around the period when alarming economic data is released across the world. This event-based manufacturing of fear is going to present interesting opportunities for investors. We need to bring in high discipline and constant preparation to ensure we do the right things in such phases.
In tough economic circumstances like we are going to see, only the most diligent investing will thrive. Such investing will constantly bring in exactly what is needed for success in tough times.
The coming year will see mature investors showing a far better quality of investing, the right preparation and adequate preparedness. It promises to be a phase of superior learning, finer practice and nuanced positioning. Such phases are usually great phases for investing. A lot can happen now.