The event ( general election results)  is over and the euphoria got tempered . A 1000 point rally in the Sensex could not be sustained and the end of the day , the Sensex closed with a gain of 250 points. What is the next step ?

Will advocate simple investing strategies.

Equity is your choice, only if the horizon for investing is 5+ years. And  regular investing is the recommendation.  

Do give a thought.......................................

The Nifty of 2014 ( 7203 on 16th May'2014  )  was higher than  the Sensex of 2004. 

So will the Nifty of 2024 be the Sensex of 2014 ( 24121 on 16th May'2014)  ???? 

We do not want to speculate ... But do give a thought.

 

Election Results , Market and Direct Equity Investments

Equity Investment is a wealth creation vehicle. Events ( results of General elections) which drive the expectation are a part of the market mechanism. Short term gains or losses and euphoria need to be tempered. 

We are in for the long haul. Asset allocation across companies and time horizon  is what will make the  wealth grow. 

A recent exercise was carried out where in investment of Rs. 1 lac ( spread across 5 scrips of Rs. 20,000 each ) carried out in Apr'04 , generated an annualized return of  ~ 27%. ( The value on 19th Apr'2014 was Rs. 11.50 lacs). This is without considering the dividends declared over the last 10 years.

The 5 scrips were - ITC , Tata Steel, Reliance, Crisil and Bata respectively.  ( Don't be surprised that Tata Steel and Reliance were underperformers in this period , with alpha being generated by the rest).

The 10 year period saw a boom, negative growth, optimism returning , again pessimism.... and now a sense of euphoria.

Let's invest in stocks to generate returns in excess of Bank FD +  2% and not let events drive our decision making process.

Investing is a process and lets continue the process.

It's the same philosophy which is guiding our investment methodology.

Risk Management and Risk Aversion

How will plan to invest ? Do you consider risk , in your investment strategy ?

If so, is it  risk aversion you are looking at  or do you want to manage the risk.

Sharing one of my articles- Risk Profiling - the key to asset allocation.

The link below :

http://www.financialexpress.com/news/risk-profiling-key-to-right-asset-allocation/1183877/0