Wednesday, February 17, 2021

It Is Like Looking Down from Everest For Investors!

For equity investors across the US and India is like staring down from the peak of Mount Everest. A steep up move from mid 2020 has left many gasping - some because they never believed and either sold off too soon and others who waited for the markets to correct before buying. 

Don't be this?

It's natural to face disappointments in the market sometimes but this rise and rise has been extraordinary and unprecedented. The big learning from this is NEVER SAY NEVER AGAIN!

The fear of missing out(FOMO) is driving investors but like always this will end badly. When and how I do not know but like a Bollywood movie the climax is clear.

The best strategy in these times is to

STEP 1 invest in identified stories that you strongly believe in.

STEP 2 invest only 10% of your allotted capital at any one particular time

STEP 3 stay invested and stay patient

STEP 4 when (the question now is when and not If) markets correct do not panic

STEP 5 invest another tranche. R E P E A T

To give a milestones is difficult but for Indian investors investing 10% of capital at every 200 point fall in the nifty will lead to a fantastic average buy rate(ABR) akin to what a plethora of advertisements ask to to do when you start a Mutual Fund SiP.

Finally after more than Six years in power the government is moving to shore up the economy by spending on infrastructure. For a consumer driven economy like ours it is imperative that we kickstart growth by ploughing in capital. The big question as always remains whether there will be action or just words that are buried in administrative files.

We have in our Portfolio generated 63% CAGR over the Covid period no thanks in small measure to not doing much, remaining invested and not panicking. It's worked for us and no reason it will not for you!

This is also a good time to restructure your portfolio and estimate what will be the focus theme for the coming period and what has not worked. Most investors are loath to exit from loss making investments but this is a good time to re position and introspect.

The message as always is to keep investing a part of your surplus in Equities as no other avenue can match up to equities as a wealth creator.