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Undecided on whether you should be looking for bargains amid the wreckage of the market crash? Well, here are some tips from a veteran trader who has seen the previous stock market crashes of 1992, 2000 and 2008.

1. Though it may seem impossible, markets have to, and do make a bottom somewhere.

2. Some stocks will go to the dogs or get delisted. Not all will survive but you can pick some future stars for absurdly low prices.

3. The next bull cycle, whenever it comes, will be led by totally a new sector/group of stocks. Market leaders of this run with astronomical valuations would take an average 10-12 years to go back to those prices.

4. Do not try to buy beaten-down stocks at one go or the ones that have fallen too much.

5. Watch Nifty PE ratio. Historically Nifty bottoms out below 12 PE. Do not follow complex/arbitrage/innovative interpretations of PE. Stick to the basics: below 12 PE is good.

6 . If investing, invest in tranches of 20 percent. Be ready to take another 20 percent if price falls 5 percent below the current price.

7. Stay diversified. Have a minimum. Have 10 stocks of different sectors. Diversification/variance will keep you alive in volatility.

8. The markets will turn much before fundamentals turn. Hence use technicals; fundamentals will be too late.

9. Do not use loan or emergency money to buy stocks. Use only money you can afford not to use for the next 10 years.

10. There is no hurry, take your time to be comfortable. Let the markets first form a base.

First Published:Mar 25, 2020 9:57 AM IST