What's the logic?

In times of crisis, revisiting the investing thesis can be reassuring. What if there is none?

- Dhirendra Kumar

A few days ago, we witnessed the latest cryptocurrency crash when the government announced its plan to legislate a 'prohibition of private cryptocurrencies' in the winter session of parliament. The ensuing panic was a sight to behold.

Of course, panic among investors is not an unusual thing. On social media, less than one week earlier, the listing of the Paytm IPO had produced a panic amongst those who had been allotted any significant amount of stock. Even as I write this page, the Indian equity markets have had a fairly volatile month. Coming on the heels of a relentless bull run that a started soon after the initial virus crash had settled, investors are a little nervous. Moreover, since this period has seen a large influx of new investors, the nervousness is a little more palpable.

Even so, what do equity investors do when their investments get shaky? At least, what should they do? During this month, a number of stocks in which I have personally invested have had this high volatility, obviously. What I did was simple. I went back and examined the original investment thesis that I had, on the basis of which I invested in the stock and am holding it. In each case, it has been pretty obvious to me that the original logic for buying that stock still held. In fact, in most cases, the occasionally lower price meant that it made sense to acquire some more of the stock.