Spontaneous and immediate stock market crash in india by Warren Buffett .One of most important secret that no one discuss about warren buffet success investing that how he thinks about bad news like stock market crash in india .
Everybody thinks that bad news about a particular stock means prices have to go lower but According to warren buffet bad news doesn’t means stock price have to go lower he said that the price are already reflected by all publicly available information means market will expected to fall only if future news is worse than expected so if you invest at this time you able to generate high returns and also get low or cheap valuations of particular companies .
If the future news of a stock is not good but better than all are expecting so the prices will increase and valuations will also increase and you will get better returns
How to think about news like stock market crash in India by warren Buffett
Let us understand this example here is the data of Sensex from 2006 to 2011
AVOID STAGE ONE THINKING –
If you want to be a successful investor then you also have to avoid stage one thinking or to develop a tendency to avoid it . Stage one thinking is defined as that investor look at crisis and the risks and but they don’t look beyond that what happens if there prediction gets correct but they will not able to control their emotions and gets panic after listening the stock market crash in india when portfolio turns into red so if you follow buffet then engage in stage two thinking in stage two thinking allows investors to think beyond the crisis and risk .Buffet says that the crisis will lead government and banks to come up with solutions and the grater the crisis the greater response will be shown by the governments which allows investors to think beyond the crisis . just suppose if rupee is falling against dollar and inflation is also rising in india then it is an obvious thing that foreign institutional investors will square of there positions and because of this there is more selling pressure in the markets and that’s how markets start crashing because other investors such as retail investor will start panic start selling and due to this bear market stock market crash in india or gets start crashing .So the point is if you invested in some stocks that turns into red then the firs thing you have to do is do not panic stay with patience because if indian market is crashing then governments and banks comes with solutions to control the inflation by increasing the interest rates or any other alternative solutions but governments and banks will come up with solutions that resolves the problem and if show your intelligence their and stay calm at that time then your portfolio will generate better results because this time foreign institutional investor will come again with more big amounts because they attracts by the by the growth as market overcome from the bear market company valuations start rising again which is also a kind of growth and this is how stock market works foreign institutional investor will come and go sometime dii increase there stake in some companies or buy sell .so this is the cycle of stock market 📉 But the thing that you have to consider for the next stock market crash in india is
•Avoid stage one thinking
•Develop a tendency to look beyond the crisis and risk
•Involves in stage two thinking
Consider the result what happens when you take such type decisions in past what mistakes you have done at that time what is the outcome of your last decisions learn from the past.
Patience
DO not panic if you made the wrong decisions sometimes it happens that we execute the wrong decisions due to the panic then leave the market and stay calm for a while and keep your left capital safe do not loose it after some break you will have to reinvest the money with proper strategy and with full patience but it is necessary to keep your capital reserve so that you can do further trading may be this is not the good time for you and your luck is not with you or you have been trapped by the big institutional traders s0 you have to save your wicket to play further . So keep this in mind that you have save your capital do not make the mistake by taking the false trade that I have to recover the losses and also keep in my mind if the stock losses the price more than 65% then it is good for you to hold those stocks and do not sell
Take only calculated risk do not try to gamble and also keep some safe investment which is constantly growing your wealth .Here is the blog where you can generate 12% returns easily without any risk and also without any head ache
This is the major reason behind the success of the father of value investing The Warren Buffett
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