‘Volatility’ is probably the best word to describe this asset class. Whether you make it your friend or enemy is up to you.

Mr. Market (as people fondly call it) often tests you for your courage and patience. Its one thing to buy or sell but it surely takes more effort to hold your investment. Volatility in the market is always accompanied by maximum activity by the investors. As the market goes up, one always gets a feeling of being underinvested, hence one starts chasing returns and the opposite is true in a falling market when you think that it won’t stop falling unless you sell your pie.

It’s been factually proven that inaction in stock market makes you the maximum money (buy and hold strategy works well), 80% of the returns are generated in 20% of the time while rest of the time one need to sit patiently and keep the research on.

In my personal observation while speaking to my clients and other stock market investors, even if a person identifies a company worth investing and share it with others, the returns can be drastically different for all those who have invested. No matter how attractive the fundamentals of the company, its prospects or its targeted return might be, but it takes more of effort to ride it through all the ups and downs in the market.

In my opinion, intelligence/analysis/ information about a company/sector are most overrated phenomena while your own behavior to buy/hold/sell in the market/stock is the most underrated one.

It’s your emotions/behavior which overtakes common sense/patience/sanity that you end up buying or selling in times of euphoria and despair respectively.

In previous bull/bear cycles that I have witnessed, there is always a new set of investors that comes to market with new set of hope. They come and chase returns (looking at rear view), in hope to make similar returns in future, enter the

bear phase and stay there during the entire downturn (terming it long term investment) to exit probably at the panic bottom and vow to never invest again.

This process repeats again & again paving the way to new & profound set of investors every time. Stock market is the place which tests you for your gut, mindset, emotions, and behavior and of course patience. It’s surely not an easy one for the person who does not have above qualities. It is a place where the money is transferred from the impatient to the patient.

Investors during Bull Run try to look out for multi-bagger ideas often forgetting that these returns of 5x 10x 20x look easy in hindsight and takes a while to get built. With all the news flow political/economical/currency/interest rates/commodity etc. in the world on a daily basis and seeing your investment fluctuate every moment, its takes courage and conviction to hold on to it through the thick & thin. Mr. Market will test you every week/month/quarter/year(s) on your behavior and then reward you for your stock picking & patience.

‘Controlling your emotions & behavior is by far one of the most important ingredients of successful stock market investing’

Kunaall Milwani

SKU Consultants