Why Investors Should Be Fearful Now

THERE are concerns across the board.

- RAJAS KELKAR

As share prices soar to record highs each trading day, even the chief justice of India, D Y Chandrachud, felt it necessary to alert regulators in a public speech. He advised the Securities and Exchange Board of India (Sebi) and Securities Appellate Tribunal, the appeals court for Sebi orders, to ensure the backbone is stable. Market pundits have put out innumerable reasons for markets to surge. However, legendary American investor Warren Buffett's strategy of being 'fearful' when others are greedy makes more sense. He said that when others are greedy, you must exercise caution; when others are fearful, you should be greedy.

In financial markets that move rapidly during a single day, it is hard to pick the point at which one can start getting fearful and start selling shares at market highs. The idea is not to sell everything in your portfolio. It is to increase the cash component in your portfolio by selling securities that have already reached your target or have given you multifold profits.