The equity markets ( Sensex) in India fell by 4.3% on 22nd September ‘2011 – one of the biggest single day fall in the last 18 months.
The previous big fall was of 546 points on 24th Feb’2011 , but again the markets regained 623 points on 1st Mar’2011.
The fall in the sensex YTD for the year has been 24% , and for the period Jan’2010 – till date, the sensex has delivered negative return of 6.8%.
So the obvious question is what should be the investment strategy now ?
The answer ,as per our take is:
• Keep things simple
• Follow the asset allocation strategy
• Going overweight on debt is recommended ( FMP’s ; Short Term Funds ; Liquid Funds) with a dash of gold
• Redirecting the equity SIP’s into debt for the next 6 months or till we see positive signals ( reduction in interest rates , inflation numbers going down, to name a few)
• On every fall of 15% in markets, switching 10% back into equity ( Since , we do not know what is the bottom, a creeping acquisition works well)
• On Direct Equity – being stock specific is the mantra
The investments in equity , be it a mutual fund or a direct equity is always with a 3 -5 year horizon.
Those among us, which has been doing a SIP since 2010, the portfolio should be in the red, unless and until there has been rebalancing . So is the case for the SIP’s undertaken in 2011.
Do not let the market movements disturb your investment methodology. If one has not undertaken the asset allocation formulae – keeping the rules of :
• Time Horizon
• Liquidity
• Risk profile , into account , now is the time to do it.
Keep it simple.. The markets moves on perception. Let it not impact you. Investing based on the above rules, will ensure a better outlook, from your point of view ( Investing is also psychological )
Enjoy your life. And as I say…” This too shall pass”…..
The previous big fall was of 546 points on 24th Feb’2011 , but again the markets regained 623 points on 1st Mar’2011.
The fall in the sensex YTD for the year has been 24% , and for the period Jan’2010 – till date, the sensex has delivered negative return of 6.8%.
So the obvious question is what should be the investment strategy now ?
The answer ,as per our take is:
• Keep things simple
• Follow the asset allocation strategy
• Going overweight on debt is recommended ( FMP’s ; Short Term Funds ; Liquid Funds) with a dash of gold
• Redirecting the equity SIP’s into debt for the next 6 months or till we see positive signals ( reduction in interest rates , inflation numbers going down, to name a few)
• On every fall of 15% in markets, switching 10% back into equity ( Since , we do not know what is the bottom, a creeping acquisition works well)
• On Direct Equity – being stock specific is the mantra
The investments in equity , be it a mutual fund or a direct equity is always with a 3 -5 year horizon.
Those among us, which has been doing a SIP since 2010, the portfolio should be in the red, unless and until there has been rebalancing . So is the case for the SIP’s undertaken in 2011.
Do not let the market movements disturb your investment methodology. If one has not undertaken the asset allocation formulae – keeping the rules of :
• Time Horizon
• Liquidity
• Risk profile , into account , now is the time to do it.
Keep it simple.. The markets moves on perception. Let it not impact you. Investing based on the above rules, will ensure a better outlook, from your point of view ( Investing is also psychological )
Enjoy your life. And as I say…” This too shall pass”…..
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