The guide to surviving a coronavirus crash

While the country has gone into a lockdown to halt the march of the Covid-19 virus, the stock market crash triggered by the global panic may be good news for long-term investors. Valuations have crashed and could fall further over recession fears. Narendra Nathan tells investors what they should do in these circumstances.There might be a silver lining to this once in a decade crashDespite short-term pains, the crash is a good accumulation opportunity for long-term investors. Previous crashes have wiped out more than 50% of the Sensex value. 74862245 Sensex PE is below long term averageWith Sensex PE close to 10-year lows, start buying in staggered manner. 74862257 Warning: Trailing PE have touched lower levels in previous bear markets over fears of fall in future earnings.Dividend yield is a good valuation toolDividend yield is at reasonable levels, another nudge to start buying. 74862266 It makes sense to buy cheapSince we are already in fair valuation zone, investors can start buying. 74862283 10-year Sensex CAGR is at 15-year lowA very low 10-year CAGR indicates that investors can start buying slowly. 74862291 Sensex dividend yield is close to 10-year highStart buying slowly and hike investments if the dividend yield goes up further. 74862295 Warning: Companies may cut dividends in coming year and dividend yield may fall again in futureHistorical low returns can be good newsHistorical 10-year CAGR turned negative only once in 2002-03. Any fall from current levels should be used to buy more as it may mean good future returns. 74862307

from Economic Times https://ift.tt/2wPi8qG