I preferred investing in the Dividend-yielding stocks in this downtrend.

I preferred investing in the Dividend-yielding stocks in this downtrend.

It is making so many people anxious these days with stock market going down and down with each passing day. Even the "trade" gurus who advise to "buy the dip" are now skeptical if they are seeing the "real dip" or dip is further away and some stocks might be going to lose so much value that their recovery to the original level might take years from here. When the market is moving up, everyone feels like a champion and it is no-brainer to invest (though in the other side it is the right time to take out your profits). In current bear scenario, there is so much advice and so much conflicting thoughts that it is hard to pick up on one thoughts.

Source

I talked with my friends and read some of the financial publication, and the mixed thoughts are as below.

1. Switch to SIP and shun all trading.

This looks most favoured view of the people I knew in my circle and one of the reasons for this view is that they used to do trading, with market going down, they did not want to trade more and let an "experienced" fund manager to pick up the stocks for them in a downtrend.

2. Exit the market completely.

These are very handful who want to exit the market completely, Actually they are not able to handle the loss and have strong intuition that market will further tank.

3. Shun the small cap and mid cap , pickup the good large cap.

This is the advise that I read in my news feed, coming from different sources that keeping mid cap and small cap in this downtrend is risky and one should exit them unless they are well researched. It is also advising to buy some good "Large Cap" stocks in this trend.

Personal thought of buying dividend yielding stock.

I purchased dividend-yielding stock and will further put more money if the downtrend continues, it is not like that I am justifying the purchase based on dividends only, I am also looking at company growth, profitability, and sustainability in the coming future.

One of the reason of picking dividend stocks that it can give me some money in the downtrend without selling my stocks. If bear market continues, atleast all red portfolio will not pinch that much as it is at least giving me dividends.

When I started investing in stocks, I looked for the charts for last 4 to 5 years and I noticed that all good stocks almost tripled in 4 years recovering from the bottom they touched in Covid period. So my vision is that I might be getting double money in the next 4 years + dividends if I picked up correctly.

It might make sense to have SIP but technically I am also doing SIP and only difference is that instead of having a fund manager, I am putting my wits and skills to the test.

Just wondering, what is your strategy in this downtrend?

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