What should investors do now?

Investors usually ask `What should we do?` either after the market has zoomed upward or when it has crashed. When markets are somnolent, investors too hibernate.  In the latest instance, the fact that the broad indices are close to breaching their old highs has prompted the question whether to book profits and re-enter at lower levels.   Before seeking the answer from ``market experts`` let us ask ourselves some questions : We call ourselves ``investors``. But why are we investing? Is it in order to have the financial ability to meet some goal in the distant future and will this goal not be achieved if we do not invest ? Or are you doing it for the excitement of ``investing`` in stocks and cannot afford to be left behind when the others are at it? If we answer in the affirmative to the first option it means that our goals should decide our investment tenure and not the market levels. If it is the latter, you will be eternally confused even after meeting the best ``market expert`` because your objectives were never clear in the first place.  None of us know where the market will be a few days, weeks or months from now Did you know in July 2010 that we would cross 20000 in September 2010? If you did not, what gives you (or the market experts) the confidence to predict the level two months from now? Of course, if you had been investing to meet some financial objective (say a down payment on a house) six months   down the line, and you have attained the requisite amount today itself, it makes sense to take some money off the table. However, this money should never enter the market again. It should be parked in debt funds for a year and then used to pay for the house. If your goals are many years down the line, just stay put. Do not tinker with your portfolio. The next question to you is ``The index has gone up but how much has your net worth increased?`` You may feel justified in feeling frustrated when your friends circle is apparently rolling in the moolah by speculating in the derivatives segment or by purchasing the latest `tip` and your (assumingly) fundamentally sound stocks have barely moved. This may make you envious and instigate you to jettison the good stocks and jump onto the bandwagon that your friends are riding. Well, this may be a sure-fire way of inviting grief. Warren Buffett has apparently implied in jest that ``of all the seven sins, envy is the worst, because it only makes you miserable. At least one enjoys while committing the other six sins.`` Your decision to buy, sell or switch stocks should not be dictated ONLY by the level of the index. Each stock has a rhythm of their own. They will move when they have to. The only thing within our control is to make a proper choice BEFORE investing and periodically reviewing that choice. Of course, if you switch from an overvalued stock to an undervalued one it is justified. But switching to dubious stocks merely because they are ``hot`` is  an invitation to disaster. The final question is ``Who are you relying on for an expert opinion?`` Is it your broker, is it business channels or is it your newspaper/magazine? Everyone will try to instill you to do ``something``. That is because their well-being depends on your actions. Everytime you transact, your broker earns a commission and the more tips and ``expert comments`` TV channels and magazines  give, the more viewers/readers they hope to attract which in turn could lead to higher advertising revenue. In the entire ecosystem, the retail investor is treated like the plankton on which the larger organisms thrive. Avoid this situation by closing your ears when the din gets too loud.  In this market it is easy to be ``seen`` as an expert by making frequent appearances on mass media. However, the real experts are not seen too often as they are too busy trying to make sense of the market mayhem and make some money in the process.  As you may have noticed, the answers to many of our questions are contained within ourselves. Take time to introspect. Seek within and you shall find.....