5 ways you can prepare for the next stock market crash

5 ways you can prepare for the next stock market crash 

Major crash wiped out a large number of investors since the financial crisis in 2008, many people are asking if this could happen again, what is the best thing to do in order to esure you are ready. 

Investors are caught in a great dilemma. On the one hand, there Agrawal, like Raamdeo of Sandip Sabhrawal and Rajen Shah highly experienced and respected market analyst cautioned investors to take advantage of low prices to buy the best quality stock. On the other hand, the world's first Shankar Sharma sends a warning of impending global stock market crash in the Sensex declined steadily to 16,000 levels in a few months time.

 Therefore, poverty investors do? 

Let doomsday prophecy "understand the logic Shankar Sharma, in an interview to CNBC-TV18, Shankar Sharma to several reasons why a global bear market is in the offing. 

First, Shankar Sharma explained that he had read the tape, and told him a clear story. While emerging markets crumbling poor economic data, the U.S. and European markets still hold. This is what happened in 2007 when the U.S. and European markets, emerging markets have held a crumpled some time ago to follow the reverse. Currently, we are in the "Twilight Town" and the U.S. market will soon follow in emerging markets, and began to crumple, Shankar Sharma said. He warned that even in Japan, there is an almost vertical rebound, eventually would be very, very bad. 

Secondly, Shankar Sharma explained that the market has not yet a country like Cyprus, the terrible collapse of influencing factors. Cyprus is not isolated, it will lead other countries to have done the reflection, there are many, many countries in Europe still have a huge banking sector relative to the national economy. For example, he said that Malta's banking sector is its gross domestic product of seven to eight times. 

Third, Shankar Sharma pointed out that there are serious domestic problems, which makes India attractive destination for foreign investors lack. In the 2013 Budget, the move towards "tax resident certificate (TRC)" as a sufficient condition by the Finance Minister P. Chidambaram is not a "rude shock," he said. Shankar Sharma particularly discouraging facts, Budget headlines is that we want to be considered to be an attractive target, through a stable tax policy, attract global liquidity, we have done the opposite subtext . 

Shankar Sharma's fourth reason is "horrible macroeconomic situation" in India. In fact, like IIM Ahmedabad and IIM Calcutta marquees agencies placing 300-400 MBA degree can not be completed, or easily in a $ 2 trillion economy to tell you how serious the situation is on the ground, he said. 

Shankar Sharma also cautioned that as macroeconomic data does not improve, there is room downlink disappointing macro data, even from 4.5-5%, has recently been projected. He also noted that with the macroeconomic situation is so vicious in any form loans, retail loans or business loans, it is absurd that the Bank will continue to remain at 20-25% earnings growth. Banks and car will be disappointed, the whole market into a tailspin, he warned. 

Shankar Sharma also cautioned that he was very private and public sector banks bearish, due to the expected profit is unreasonable. He says, in a very economic slowdown, you can not expect banks to stand out and make a lot of money, while other sectors injury or harm to consumers. 

Fifth, Shankar Sharma warned that keeping active is the market exchange traded fund (ETF) billions of capital flows. However, since these funds come momentum driven strategy, it can be quickly reversed. He warned that the stock market sell about $ 1 billion, will trigger restrictions. 

The expected level, Shankar Sharma 15000-16000 Sensex index plunged about this grim prognosis. He suggested that investors are wary of their own tanks in a bear market resilience - the consumer and pharmaceutical. These broad areas, investors will at least save some money. Continue to invest in the traditional economy, such as metal, manufacturing, capital goods, banking and infrared He said that this is absolutely disastrous. 

Now the million dollar question is what you should do. It is true that you can not ignore Shankar Sharma prophecy. At the same time, it is true, you can not ignore the fact that he has been in previous terrible mistake. So, my advice (from past experience) is the famous "halfway house" business philosophy.

 What I would suggest is this: 

1, first of all, all the junk, trash and poor to get rid of stocks in the portfolio. It does not matter how many books you lose. These worthless idiot crumple the first sign of trouble. Just get rid of them; 

2 lists the top 10 or top 20 dream shares. These will become the dominant market leader in their sector and a strong management, good balance sheets and strong product line. Take a look at Rakesh Jhunjhunwala models Fund for inspiration; 

3 Check your portfolio allocation. Make sure you have enough resources to invest in liquid / debt funds. My personal time is 40:60 equity allocation: debt, so I have a lot of gun powder left, while the lower price; 

4 buy driblets. In an ordinary day, you like to buy a little stock. In a bad day, buy a little more (maybe, two) of your favorite stocks. In this way, if the stock price falls, you have to buy the average cost 

The next quarter (June 2013, September 2013), we know for sure whether Shankar Sharma prophecy is true or false. We will review the situation.