I learnt a very interesting word today - Zugzwang.
It is German for "compulsion to move".
It is usually used to denote an unfavourable situation in games like Chess where for the game to go on, you have to make a move on your turn, even if it makes you worse off i.e. you can't simply pass your turn even if you want to/should.
What does this have to do with stock markets and investing?
There are so many investors who zugzwang themselves while investing in the stock market.
They feel compelled to make a move every now and then.
Some news comes out and they feel like they need to act - change their SIPs or their Mutual Funds, increase or decrease their investment and what not.
Stock markets are not a game of chess. You can pass.
Not only you can pass, you should pass. More often than not, this will be a better strategy.
Here is a confession - as an expert who should know how to decode every breath the market takes and invest accordingly - I usually do nothing.
I did nothing when the new government got elected.
I did nothing when Brexit happened.
I did nothing when demonetisation happened.
I did nothing when GST happened.
It's not like I don't have opinions on these events. I do but I also know that I am more likely to hurt myself by acting based on my in-the-thick-of-the-moment predictions.
I did not change anything when the market went down and I am changing nothing when it is making new highs.
I haven't skipped or stopped my SIPs based on any economic news or stock market gyrations for years now.
I would rather stick to a tried-and-tested strategy.
If I feel something works better, I would test it and if it works add it to the strategy itself, instead of over-riding it at every news.
So next time, when you feel like making a move, just remember that you can pass. :)