Buy or wait?: Experts, newcomers share their learnings from the 2008 market crash

The stock market, it is said, is a place where those with money get the experience and those with experience get the money. The brutal sell-off over the past month has revived memories of the global financial crisis of 2008 and the subsequent market meltdown. Many are comparing the current crash with that seen in 2008, perhaps in the hope that the recovery too could be as swift. Among the many truisms of the stock market, one that almost everybody agrees with, is that it is a strict teacher. And the most valuable learnings are handed down during the worst of downturns. Market meltdowns are painful when you are in the midst of it, and while they may leave some scars, they also toughen you in some ways.

Last week, I posed a question on my twitter handle: “What were some expensive lessons you've learned while investing in the stock market during 2008?”

The response was overwhelming, with veteran investors and recent entrants sharing their learnings and experiences.

Below are the edited responses to the question

When you're in a major bear market, don't buy the first crash. Many false dawns happen in a bear market. Better to buy 20 percent higher but surer. Buy strength, sell weakness. Don't ever do the reverse, in a brutal bear market. Never buy leveraged cos with leverage.

Don't buy for considerations like patriotism. Someone gave me that spiel when market was 35 percent down. I fell for it and went in with a huge lumpsum! Lesson is to be patriotic spread over a period of time.

No one has every achieved anything worthwhile playing safe. Everyone waits for clarity, but once clarity emerges bhaav bhi clarity ke honge.(In other words, when there is clarity, you won’t get anything cheap)

Going partly in cash is stupid. Go 100% if you think markets are expensive.

Diversify, keep aside money for two years of household expenses, and keep emotions and temperament under control in such markets. Also, new leadership emerges in new bull cycle, don't remain obsessed with old performers.

2008 was OK, 2018 was expensive learning for me! Need to wait before concluding the 2020 lessons :-)

History might not repeat. But people do.

It is ok to wait and buy 10 percent higher after the markets are stable. That holds true even in the current phase of the market.

Keep cash for three years expenses, planned and unplanned. Don't believe experts. Their guess is as good as anybody’s.

Never against the trend no matter what the level. Go by quality and not how much a stock has fallen from its peak. If you can’t bear to see your portfolio in the red, blindly invest through mutual funds.

Had started four mutual fund SIPs in 2006, could continue only two of them. That too because I had forgotten to discontinue one of them. It has given me a return of around 9 percent compounded till date, despite the 40 percent correction in the market.

Learn to sit on cash when you feel market is overheated. Financial stocks have the tendency to retrench 50 percent every few years. Every thing is good at a price, quality or no quality. Give equal importance to health and family relationship.

Invest in shares for long term once Nifty price earning multiple comes below 15 and sell them when Nifty price earning multiple is above 25.

A good buying opportunity comes once in 8-10 years. Let your money earn interest while you patiently wait for the opportunity. Leave the party when the sheep start entering the pen.

Invest with your own money. Don’t take leveraged positions, or buy shares with margin funding. The quote "be greedy when others are fearful" has proved right more often than not.