November 19, 2019
“You only have to do a very few things right in your life so long as you don’t do too many things wrong” – Warren Buffett
The two most celebrated festivals of Hindu culture – Diwali & Holi shows us the way how to lead better, healthier life. For Diwali we cleanse our home and surroundings, for Holi we purify our home and surroundings on ‘Holika Dahan’ and then splash the new colours on ‘Dulhandi’, the following day. The colours of bond, trust and friendship among our fraternity who stand by us at all times – good or not so good.
Coincidentally Diwali comes midway the financial year and Holi comes towards the close of it. What we do to cleanse and purify our physical and spiritual life, the same need to be done to our portfolio for a financially healthy life. While midway the financial year we should scan our portfolio for cleansing, we should purify it and splash it with new colours towards the close of the year.
Purifying and splashing new colours to your investments means – assessing your financial situation and risk appetite in the light of any new development in your personal life that may have financial implications and review & rebalance your portfolio accordingly. If need be then splash i.e include new investment products in your portfolio.
Equity:Economy seems to have gotten over the demonetisation and GST effects as reflected in recent GDP & manufacturing numbers. Inflation have inched up though its well within the target so far. But overshot fiscal deficit, rising crude oil prices, less than normal rainfall in winter and summer season arriving may cause food inflation to go up. Key state’s election later this year and parliamentary election next year will contribute to volatility along with significant/non-significant news. Overall we at InvestmentMitra think that markets may see a rally before the financial year close and then remain volatile with positive bias unless some major but unexpected event take place.
Debt:Bond yields have become very attractive with 10 year G-Sec trading at around 7.7%. Though inflation seems to be heading north but we don’t see it reaching levels that may prompt RBI to increase benchmark interest rates anytime soon. Liquidity in market may be a different story. SBI, the largest PSU bank hiked its interest rates though they are still under 6.75%. Other banks are expected to follow suit.
Gold:Recent volatility in stock and debt market brought some shine in gold prices with price of 10 grams of gold breaching 33,000 in some Indian cities. It had been languishing around 29000 for quite some time. Gold is a good hedge against inflation in long term and safe heaven during any economic turmoil.
Crypto-currencies:We have been approached by good number of clients for our views on Bitcoin and other crypto-currencies. Our advice – an investor with very large heart should speculate in these currencies and that to for not more than 2% of his/her portfolio value. Trading or buying in any crypto-currency is a speculation and Not an investment at all.
So, this Holi purify your portfolio i.e. re-assess your financial situation, requirement of funds from your investments over next 1, 3 & 5 years, redo your risk analysis, check your asset allocation and splash new colours of investments in accordance with such analysis.
Wish you a Very Happy Holi from all of us at InvestmentMitra!