Is Market Overvalued Now

To be honest this is the first time I am seeing or even hearing that almost all the asset class are All Time High. Be it Indian Market, US Market, Crypto, Gold, Silver, Real Estate and what not. Whoever been investing their money are sitting on a lot of profit.

PC: Pixabay.com

Now the problem with investing comes is that we have to be sure when to come out of the market i.e book profit. As an individual we are not 100% sure when the market will be on top whereas will be on bottom. So the best thing to do is to have a exit plan. For example, if you have got say 50% returns on your investment, does your plan is to have 100% returns or are you ok in profit booking your initial capital I.e. safeguarding it.

I know a lot of people will argue that if we profit book, the stock which could have been a multibagger, the opportunity will be lost. That's true, what I am saying is that you should not book all the profit. What I am saying is that if your investment is say X and you have got a profit of Y, you can take out some percentage of that profit. In that way you are booking the profit in staggering way. Like a SWP I.e. Systematic Withdrawal Plan. Taking out small percentage of profit every month.

Now coming back to the question if the market is overvalued. The problem is you never know, the market doesn't behave as we think it will be. Like everyone thought that market will be reaching 25K soon but again there will be volatility in the market till the election and if the election result is favorable the market can give us good result. If the election result is not then market can fall anywhere between 5% to 10%. So to be honest, we have to play our part and invest as well as profit booking based on your risk appetite and not think of anything else in the market.

I have started profit booking along with using my ETF strategy to go with lower percentage of profit every now and them which market will always give. I am booking profit at 6% and now I am sitting at 16% annual return which is quite good and if continues my money can be doubled in say less than 5 years as per rule of 72.

This is the safe money that means I will not end up losing it big because ETF can never go to zero, so I can play along every time whether the market is going up, down or sideways.

Posted Using InLeo Alpha