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87Should you buy stocks when the market is crashing?May-20-2020

Should you buy stocks when the market is crashing?

Blog by – Mr. Ashish Ajmera

The coronavirus pandemic has brought in many waves of panic and furor. It is not just a physical problem anymore, it started affecting the stock market, globally, as soon as it arrived and the repercussions are here to last. Now, this statement isn’t supposed to scare any of us, it just is the truth.


The share market crash was a significant low with the Indian market indices, Sensex, and Nifty dropping with more than 30%. Which brings us to the point that of a bear market. There are disagreements among economists and advisors about the actual definition of a bear market, but a commonly accepted definition is when the market sees a 20% drop from its last peak.


With more than a 30% drop in the Indian Stock Market, we have surely entered a bear market. A share market crash doesn’t come across as the best time for one to buy stocks. But contrary to this opinion and fear, it is true that one can and should buy stocks when the market is crashing. The stocks, during a stock market crash, have an intensified potential to move higher, as the price or starting point is low, to begin with.


If you reach out to an online stock trading company in these times, they will tell you that a stock market crash is a big buying opportunity, almost like a black-Friday sale! The percentage profit that people make on the stocks they buy in a bear market can go up to as much as 350% !!


Now, while this gets your hopes high, this number is reached when one follows this principle called, ‘Buy and Hold’. This essentially means that to see a positive return as well as an attractive one that beautifies your portfolio occurs when one buys a stock at a low price and then wait for a favorable high to sell it at.


This happens in the long haul, it can even be over 5 years to reach a great percentage of profit, but of course, it is worth it. Another factor that plays a part in this strategy is that there are sale charges on stock trading, i.e., commissions are paid with each transaction. To make up for it while having a good profit margin, buy in this kind of a bear market and hold till you see a margin of over 100%. To choose which stocks to put your money in, you can and should reach out to a stock advisory company, and which social distancing norms, preferably an online stock trading company.


This opportunity of buying comes once in a blue moon and investors should use it to aggressively buy stocks, and not sell, or buy out. While panic is running high, one has to keep their emotions aside and look at their portfolio and investments with objectivity.


If you have your skin in the game and are panicking enough to buy-out, you should take a step back and come back to the game once your emotions have settled down. You don’t want to make a mistake that you end up regretting 3-4 years later where the same stocks are being sold for more than a 100% profit and you might have sold them with more than a 50% loss.


We would urge both: seasoned traders and amateur traders to reach out to stock market advisories and online stock trading companies to get a better understanding and idea of how to deal with a stock market crash as big as this one.


For new and amateur traders, this is a great opportunity to get started in the trading and investment world with even the biggest listed companies having low prices. Do not be afraid to start off with your trading journey in a time that doesn’t look promising. It doesn’t look promising for the time being, but the ‘buy-and-hold’ strategy with guidance from an online stock market advisory will ensure your investments made in a share market crash are in fact profitable in multipliers.


We hope this article has given you more information on the topic of market crashes and whether they are a good time to buy stocks. In case you have any more queries, you can write to us on helpdesk@ajmera.co.in or call us on +91 22 4062 8990


Also Read: Stock market crash: Is it a good time to invest?


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