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| Image courtesy of Nutdanai / FreeDigitalPhotos.net |
This year has been an absolute nightmare for investors in
general. While the Sensex stocks which
is just 30 stocks index has held its ground better, overall stock market has
lost anywhere around 15% to 25% depending on the market cap. For example, if you look at CNX Midcap index, it has lost about 18% as of
date since the beginning of the year.
Bond investors were not safe either. Due to rupees free fall, RBI has
taken some drastic measure on liquidity which made most the yields shoot up
driving the bond prices down. Even money
market liquid funds reported negative returns in the last week. Anyway, who said investing is easy?
While the stock index has been down 18% to 25%, some
individual stocks have been down 50% or more in some cases. A correction of this kind would make may investors lose sleep and that is the reason there is very minimal retain participation recently. Why do majority of us cannot handle this while some of the investors like Warren Buffet or Mohnish Pabrai can handle even 50% contraction with ease? To understand this we need to get into biology a bit.
