Every Crisis Is A Buying Opportunity For An Investor

If you were part of the markets when Indira Gandhi was shot dead, there was absolute panic and even though we didn’t really have such an orderly circuit system back then like we have now, there were no buyers to be found. I recall trying to call my broker in panic and he was so busy selling stocks that he hardly had time to speak.

But that passed quickly and soon thereafter, the advent of Rajiv Gandhi took the market into a strong bull market. This was one of the best times of my early market career. I made so much money out of this phase that it is etched in my memory.

The crisis of 1988, when the Sensex bottomed at 390 (yes, you read that right!), was the all-time low from where the market began one of its best bull markets. Institutional presence had just begun back then, in very mild ways and boy, did they get stocks cheap! But all of us were so caught in the gloom and doom that surrounded us all that I totally missed this phase of crisis.

The Kuwait war in 1990 created yet another bottom and those that bought in were hugely rewarded by the Harshad bull market of 1992. I recall this vividly because it was one of the bottoms that I tracked using charts and hence, could catch it nicely. Just in time for the next bull phase. But Harshad mess dovetailed into India getting into huge financial crisis of its own.

The reforms by PV Narasimha Rao opened the floodgates for the FIIs to come in and the market entered into a massive accumulation phase and witnessed a largely sideways phase that appeared boring when it was going on but really laid the foundation of all that was to come later!

For the next good crisis bottom, we had to wait all the way till 1998 following the Gulf currency crisis in 1997–98 (Sensex 3,000) and although this one took us all the way to the Tech boom top into 2,000 (Sensex 6,100), I really couldn’t take advantage of it as, like everyone else, we were all scared of what would Y2K would bring.

But we all escaped when the madness of Ketan Parekh-created tech mania made up for lost opportunities. Fortunately, didn't really get caught out near the highs of that one when that levy broke! A lucky escape.   

We got the next one soon thereafter in 2001, soon after the 9/11 bombings, although it would take a good two years for the market to really build a base and then begin its climb. This was truly the one that most analysts got right and so also the current day titans. The wealth of so many of today's big names really made their money in here. It lasted into the heady highs of 2008 (Sensex 21,000).

The devastating fall from that top felled many as the Sensex dived to a low at 7,600. The farsighted took full advantage of this fall and across the next some years, more wealth was built by several others as the Sensex made a double top near 21,000 by 2012. Unfortunately, I was not among them and missed this bus almost completely!

We then had another crisis that emerged in the form of a currency crisis. Thereafter, there were two panic lows, in 2013 and 2016, both near the budget day when the panicked investors just threw away their shares in fear of levy of capital gains tax and such other items! If you look for them on the charts, you may not really spot them but for those who lived through it, we know how acute those declines were!

The smart set grabbed everything on offer and with Narendra Modi coming in 2014, the process just continued, never stopping till the 2018–19 highs. From 2013 through till 2019 was one of the biggest wealth building times for large HNI investors as they loaded their truck with stocks and were handsomely rewarded.

The story after this is known to many! The Covid crisis of 2020 probably created on of the biggest buying bottoms for investors. What an incredible stroke of luck for many those that chose to come to the market at that time (as their normal businesses shut or went bust).

The extraordinary rise from the Covid low continues into this day (Sensex 80,000).

What a journey it has been! I count myself fortunate for having been part of this roller coaster ride! It has taught me everything I know today about the markets, how it works, how it behaves, what moves it and what will not. It has shown me how to spot the patterns, how to put things together so that one is not caught on the wrong side. Knowledge gathered along the way, tempered by the sword of experience is what transforms into wisdom.

Some us in that journey learnt all these very well and flourished and today are the titans of the market. Others learnt some and are faring decently. But there are many others too, who didn't learn and became a statistic through time.

Market teaches, but softly. It is our duty to listen closely and do its bidding.

Now Trump is brewing yet another crisis! Stock prices have retreated anything between 10% and 70%! If that isn't creating a crisis in stocks, what is? There is dismay, certainly among the people, but is there fear? I would wager not. There was frustration and despondency, until the rally from the April 7 bottom! But each crisis low has a character of its own. We will have to see what behavioural patterns this one throws up. Much of this will be known in hindsight, for sure. But is the smart set buying into this market? That is what we need to check.

Are you lost in the valuation game? Do you even know how that game works or is played? Or, are you just parroting the words that you hear on TV? The FII shorts in Index have come off from around close to 4 lakh contracts to just around 20,000 now! They have turned net buyers in April. Are you still hoping to get out of your earlier 'trapped-in' stock and waiting for deliverance while your money lies idle in a savings bank account?

Get alive. Opportunities also knock softly on the door. All crises don't come dressed in the same clothes that we can recognise them easily. Maybe you have one at hand, maybe you don't. Question is, are you looking?