“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
India celebrated Vijay-Dashami – a festival that celebrates the victory of good over evil. When we talk about investing mistakes or evils, the two fundamental evils are – Greed and Fear that causes consequential investing mistakes & sometime blunders.
Common question across time periods that we come across from our investor is, “Should I invest at this level”. And this question is irrespective of the market situation – whether stock markets are in bear phase – continuously falling for many sessions or are in bull phase-increasing rapidly or are range bound with no great swing on either side.
This is because of our inherent human trait of either being too greedy or too afraid of the assumed situation. When we talk of long term, everybody agrees that in the long run economy will grow for sure and stock markets will also rise. And it is a general consensus that in the long run equity markets will outperform all other asset classes.
What is the answer – Our simple answer to this question is – INVEST. We often tell our investors is that you should ask where I should invest at these levels. Whether you should invest in equity or debt or gold or real estate – that should be your question. And our answer to the same will depend on your investment objectives. Your investment objectives include the purpose of your investment i.e. end objective, time to achieve that objective, your risk appetite, liquidity needs and many others.
Current Market Situation – Markets are in a bull phase. Economic activities are back to pre-covid levels though there is shift in consumption patterns due to the lessons learnt during covid period. Companies are reporting good profits though a good amount of profits can be attributed to cost savings in interest payments and operations. Sales activities have also picked up well which is reflected by higher GST collection.
Capacity utilization has increased and it increased the consumption of power and fuel as well. Increased capacity utilization will motivate entrepreneurs to commission new plants, open more offices and generate more employment. And higher employment will lead to higher incomes and higher spending.
Steps taken over last few years by the government, especially in the field of infrastructure will help faster movements of goods to different places and also result in lot of saving in transportation cost. Recently announced Gati Shakti Master Plan will take infrastructure development to a very different level and ensure great savings in terms of time and cost both.
With all positives there are certain concerns as well. Inflation and fear of rate increase by RBI, China’s economic worries and supply constraints, concerns over power supply in India, socio/politico situations in India and the world, trade war tension, are few among them.
What should an Investor do – Will the market momentum continue over next one, three or six months or even a year – we don’t know. Will there be correction like last March – honestly we can never predict such movements. What we know is – it’s very important to win over your Greed at this point of time. Those who have made high profits must book profits and rebalance the portfolio. We strongly advise you to talk to your advisor to know what should be your asset allocation at this point of time.
For all your investment queries or review of existing investment and insurance policies, you may whatsapp/write to us at 📱 9958447700 / 9254673750 or 📧 firstname.lastname@example.org