Let’s admit it, not every day will present an opportunity to buy stocks as an investor. There are periods of droughts and periods of abundance of cheap stocks. So the question is, what do we do in a quiet market? Feeling cash-rich but having little or no opportunities to deploy them meaningfully can be a little annoying at times. But remember, it’s not wrong to hold onto cash. Your cash does not need to be fully deployed all the time if you have a clear picture of what you intend to do in the market. Strategic planning comes in at this stage. A quiet market, or one that presents little opportunities, is an opportunity for us to take a step back and take a look at the bigger picture of where we are and what we are doing. For me, it allowed me to review my position in the market and to re-structure my portfolio to have the combination of stocks that I want and to remove those that I don’t want in there anymore. Here are a few things you can do to spend your time meaningfully:
1. Tap Into A Largely Untapped Resource – Investor Relations
While we’re not busy scouting for stocks, there are a lot of things we can do. For example, we can call up the Investor Relations to understand more about the companies that we are invested in and to find out progress of the business. I find that too little people actually do that! They are hired to answer your queries, don’t leave such a source untapped! You’ll be surprised with some of the information they can provide you with that is quite difficult to find simply by googling. After all, they have more industrial knowledge and have a closer relationship to the company’s CEO than us retail investors. Drop them an e-mail with your queries and more often than not they will be more than willing to answer all of your questions!
2. Refine Your Craft
Is your research and analysis perfect? Probably not, neither is mine. Downtimes in the market are the best time to learn how to improve your analyses of companies by reading up extensively! I’ve been doing a lot of reading and testing out strategies and incorporating them into my own investment process during this period! There’s always room for improvement, be it in the way you filter out companies or value companies, so don’t assume your abilities cannot be further improved! You’ll be more than surprised to find that something good can always be better as you read up more investment books and implement the strategies taught to your already existing ones, further enhancing it!
3. Plan & Prepare
This is the best time to plan and prepare ahead of time what you are going to execute! Plan how you want to deploy your cash reserves when the time is right. Things like what companies you want to have in your portfolio, or whether to increase or decrease position in the company when the time comes. This is the best time to start researching on companies that you like after you have identified them, plan at what price you might want to get them at, determine its value ahead of time, etc. You don’t want to find yourself in the position when the stock finally got to a very attractive level yet you haven’t even begun researching and understanding the company. Some opportunities don’t stick around for very long!
Knowing clearly how you want to distribute your funds in advance will help you focus on doing the right things when the pace picks up. More likely than not, you’ll just keep taking a small position in a new company and ignore adding to your winners or weeding out your losers. It’s not always about finding new companies, sometimes its re-looking at what you already have, finding out if they have gotten more attractive or not.
These things are not just applicable for a quiet market, in fact, it should be done all the time. But just in case you feel nothing meaningful to do in this quiet market (for me at least), these are some courses of action you can take to spend your time meaningfully while level-ling up your investment abilities! For those who have never done such things, it’s a perfect opportunity to get your habit started!