By Sthitaprajnya Panigrahi
The investors are quite familiar with the fragility of the stock market as it is prone to decline anytime. Triggered by various factors such as unexpected wars, pandemic outbreak or any kind of economic downfall, the crashing of the stock market is inevitable. Affecting businesses severely crashing of the stock market can bring down the investors to a lower ground resulting in huge financial losses. History holds numerous instances of major stock market break downs and many businesses coming out of it with negligible or minimal losses. The strategy is to be prepared. This article focuses on the game plans that need to be adopted by the leaders of the corporate sector while dealing with the stock market downfalls.
1. Wait till the Dust Settles: Patience is the weapon of a great industrialist. When a market declines the result may vary as per the market size, the number of investors, your investment plan (long term or short term) and current worth of shares. Any kind of panic-driven action can lead to major losses that you may find hard to recover from. Trust your pre-planned strategies and instincts to ride out the storm. It is advisable, especially for the long term investors to do absolutely nothing till the market calms down.
2. Do Not Sell Your Stocks: Due to the downfall of the market, undoubtedly the value of the shares would have declined as well. At this particular time many investors try to purchase the profitable stocks at a minimal worth. Selling your shares at such a time would not benefit you positively as the price would have gone down already. Apart from that by selling the valuable assets you will also lose the chance to revive from the current losses.
3. Purchase New Stocks If Possible: Buying low and selling low is the ultimate strategy of investment. Apply the same strategy to revive your business from the existing stock market crisis. Now that the prices are low try to purchase new shares at a minimal rate. Analyze the current and future trends of the market and estimate which shares hold the potential to thrive in the near future.
4. Consider Paying Off your Debts: As the situation might get worsen in the upcoming days, it is better to pay off your existing debts to save the business from getting bankrupt. Try utilizing your liquidity or assets and pay off the mortgaged assets that can help you in stabilizing the business.
5. Re-Arrange Your Portfolio: Take time to review your investments and rearrange your portfolio to bring back your assets into a balanced position. It is a good time to analyze your assets and liquidity and channelize them to achieve better outcomes. By going through your portfolio you can very well analyze the assets that you need to keep through the storm as their value can increase significantly. You can also come across the assets that you can utilize to collect some cash or liquidity to pay off your debts for surviving the crisis.
6. Seek Help if you need: The most important factor while going through a crash down is opting for help or second opinion. Seek help from the professional financial advisors and do prolific research to reorganize your strategy. There have been instances of businesses coming out of the crashes by becoming stronger and more vigilant. Consider your investment in the market as a journey where you will learn new lessons with every rise and downfall of the share market.