If you really understand the concept of intrinsic value then the stock market decline of recent weeks is what you want to happen frequently. It is very important to understand that ‘price’ contains no information about the value.

If I ask all the investors whether they would love to purchase your favourite stocks for 50% discount price, all of them will raise their hands and say yes. Same investors if I offer them 50% lower price of their favourite stocks in the gloomy environment, very few people will buy them.

Investing in the middle of volatility is the most rewarding opportunities available occasionally to the investor and yet many investors do not take advantage of it as it seems incredibly risky thing to do at that time.

It is during these volatile period investors should focus on buying good quality stocks with good prospects, same way as you buy groceries for your home.

Like us, you should also like when stock price fall down so that you can buy more. Share price when declines, particularly those that are produced when everyone around you see the doom and gloom ahead, is precisely what you want.

But how do you know that shares are cheap? Without the knowledge of intrinsic value, how do you know whether to buy more or to panic? Many investors don’t know the value of their shares. They frequently panic when stock declines and also suffer by paying too much for the stock.

The main reason, especially the retail investors fail to take advantage of stock market decline is because these declines come with the bad news. And unfortunately such bad news perverts good idea to bad one. What was supposedly thought of brilliant opportunity becomes a high risk play that should be avoided until there is more certainty.

Nobody should miss out buying shares in great businesses because of the fear that shares might go down even more. And there is no need to panic and sell them at depressed price either.

But such natural behaviour requires you to have something other than the price to look at. You need to know the value of the business and its shares.

Only if you are confident that business is actually worth Rs 500 per share and you can see a fall in its price from Rs 400 to Rs 300, for example – for what it is a terrific opportunity. The right response to buy more.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise to take professional advice before going ahead with our views.