Boom or bust

The Sensex is going through the ceiling one day and crashing with equal speed the next. Should you play safe and shun the stock markets? We tell you golden rules to beat the market and have an edge even in volatility.

It's a question that's on most minds today: where's the market headed? First, the BSE Sensex beat predictions by zipping past the 19,000 ceiling. Then, hardly two full days after, it came crashing down, taking thousands of investors by surprise and eating away crores of investor wealth.

The movement of the key indices has managed to fox even savvy investors, leaving newcomers totally at a loss.

But take heart. With a little thought, you can develop a rational strategy that works over the long term. Take a look at nine golden rules that we believe can shorten your journey to riches.

Also, we found that there are sound mathematical reasons to believe that the upside in volatility is more than the downside. Indeed, historically stock markets generate higher returns than other, less volatile assets. Which leads us to conclude that holding volatile stocks may work well, especially in the long run.

Regardless of the market’s gyrations, there are some stocks  it makes sense to invest in. Picking these is not about timing the market (which investors should never do), but about spotting an opportunity. So, it doesn’t matter if the markets are volatile — as long as the stocks are chosen with care, you can rest easy.

The bottomline is that despite its dramatic movements, you have little to fear from the markets if you stick to a strategy that will keep your portfolio steady.