Stock market squid game: When to become greedy, when to become cautious? Experts explain

Stock market squid game: Late Rakesh Jhunjhunwala once said that a savvy stock investor waits for a stock market crash for discounted shopping, whereas others pump money when there is a bull trend on Dalal Street. The ace investor said buying or selling stocks is no different from other shopping. The Big Bull correlated stock market investing with today’s Squid Game, saying, we try buying that utility or any other useful items from a sale; an intelligent investor buys the selected stocks during a stock market crash.

According to stock market experts, buying or selling stocks during the bloodbath on Dalal Street is not that easy as no one can time the market. So, it’s better to keep a thumb rule and start investing based on that investing rule. Decoding the Squid Game of the stock market, they said one should buy cheaper stocks when the market corrects by 5-6 per cent. If it continues to correct for another 4-5 per cent, one should consider initiating the next tranche of buying. Likewise, one should continue buying other tranches on every 4-5 per cent correction in the market. However, they said that maintaining a stop loss is also essential. They advised all kinds of investors to keep stopping loss while taking any position in the stock market. On how to find a stop loss, they urged investors to maintain a stop loss at least 7 per cent below the position.

How to become rich amid bloodbath on D-street

On how savvy investors invest in the stock market, Mahesh M Ojha, AVP — Research at Hensex Securities, said, “A smart investor doesn’t try to time the market. They invest when the market is under bear grip as it allows them discounted shopping. Such investors don’t wait for the market to stabilise as they have their own set of rules for stock investing. They invest in tranches. The first tranche after a 5-6 per cent correction in the market follows the next trance on every 4-5 per cent correction in the equity market. Similarly, they don’t become greedy during a bull trend. They book profit when their investment goal arrives. So, having an investment goal is also important. However, the investment goal has to be realistic. Expecting multibagger returns on each investment can be termed a non-realistic investment goal.”

Must maintain stop loss

Decoding the Squid Game of the stock market, Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said, “Stock investment doesn’t give you returns every time you invest. So, you should also be ready to book loss. But, a smart investor minimises losses by maintaining strict stop loss. One should maintain at least a 7 per cent stop loss in one’s position. One with a high-risk appetite can maintain this stop loss by 1-2 per cent higher than the above figure.”

Loss harvesting benefit in ITR filing

On how savvy investors use stop-loss triggers, Pankaj Mathpal, MD & CEO at Optima Money Managers, said, “During the stock market crash, a smart investor books profit, which is used at the time of ITR filing. A smart investor sues loss harvested during a stock market fall to minimise one’s loss in continuing one’s income tax outgo. So, one’s loss can become one’s gain at the end of the financial year because a penny saved is earned.”

Conclusion

The stock market squid game suggests that smart investors become greedy during a stock market crash and cautious during a bull trend.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.