InvestorQ : Is it true that a crash is the best time to look for market bargains?
Abhi Yadav made post

Is it true that a crash is the best time to look for market bargains?

Abhi Yadav answered.
3 years ago

Capitalizing on a crash is easier said than done. There are three challenges here. You must have the stomach to buy in a market where everyone is bleeding. Secondly, you must possess the liquidity to buy stocks in a crash, which rarely happens. And lastly, you must have the wisdom to distinguish between a buying opportunity and a bear market. Don’t be a bear market sucker.

Back in May 2004, the NDA government had fallen and a Congress government supported by the Left parties looked the likely option. Fearing that reforms would go for a toss, markets (especially PSU stocks) lost close to half their value in 3 days. The truth was that the reforms process was, by then irreversible. The markets bounced back and the crash shoppers made a killing.

As the legendary investor, George Soros, put it “The worse a situation becomes and the less it takes to turn it around, the bigger the upside” Investors who bought US stocks in 1987 or 2009, Indian investors who bought in 2004 or 2006 or 2009 would be sitting on a fortune. But it is not that simple in reality. Creating a shopping list in a crash requires guts, panache and conviction.