Stock market’s behavior is highly volatile, just like a child. Their mood swings are quite similar. To the same chocolate the child may start jumping with joy and at times just throws it down in anger. But in the end, you make your child happy and the child hugs you, filling joy in your life. So are the equity markets.
Over last two years stock markets have swung to extremes on both the sides. While in March 2020 it offered one of the best opportunities to invest. And after that it didn’t let anyone ride the rally who missed boarding the bus at that time. It not only recovered its losses but galloped to much greater heights though not commensurate to its strengths i.e. earnings.
Slowly economy too followed the stock markets. And it has now almost crossed the pre-covid level. Additionally corporate took advantage of the covid situation and the covid packages offered by the governments, to reduce their costs and reported higher profits.
In our October communication we had suggested profit booking in your portfolio and park money in comparatively less riskier funds like balance advantage funds or liquid/ultra short term funds for time being.
Markets are down from their peaks by over 12% now, majorly on fear of another covid wave, rising inflation, central banks raising interest rates, strengthening dollar, relentless selling by FIIs etc. While these fears will continue to hog the markets for some time, how much markets will go further down, honestly no one can tell you with full confidence.
We feel that present are the good levels and now you should start putting money into equity markets, preferably through mutual funds. We suggest you can put around 20-25% of your long term surplus that you want to invest for long term. And still you want to trade cautiously then invest in balance advantage funds. NFO of Mahindra Manulife Balance Advantage Fund will close this Thursday on 23rd December. (Read our previous blog for the same.)
Reach out to your InvestmentMitra to discuss your portfolios and what suits you best. And don’t miss the year end sale.