Investment - Time Horizon and Risk Profile

I'm an ardent follower that every investment should be carrried out with a ' Time Horizon' and in accordance with your ' Risk Profile'. In line with this credo, sharing the link of my article in Financial Express.

http://www.financialexpress.com/news/invest-with-a-time-horizon-in-keeping-with-risk-profile/865715/0

Investing in volataile times

In May'2011, I wrote a piece in Financial Express , on the process which an investor can undertake during volatality. As I look back , today , what I did state then in May' 2011, does ring a bell, even today .

Check the link - http://www.financialexpress.com/news/during-volatility-in-equities-invest-in-liquid-funds/797269/0

Traps - Highest Guaranteed NAV

Highest Guaranteed NAV -  Sharing my take on this product .

http://www.financialexpress.com/news/highest-nav-plan-doesnt-guarantee-highest-return/878771/0

Portfolio Construction

Portfolio Construction is the structure on which the investments should be built upon. A very basic but important step, which generally we do not carry out , apparently for lack of time or to get the investment money out. Well, in investing , strategy and having a road map is more important, that the investing process itself.

Taking this account, sharing the approach which you could undertake ,  in a peice in Financial Express - http://www.financialexpress.com/news/ignoring-riskreward-tradeoff-recipe-for-disaster/872344/0

Diwali - Samwat 2068 - Outlook

Wishing you a very Happy Diwali and a prosperous year ahead. The year gone by, the Goddesses Lakshmi, true to her nature , is playing around.


One finds the optimism waning and majority of the investments not generating the double digit returns of the previous periods, except for say, property and to an extend Gold ( if one had invested before sept’2011).

This is exactly the time to take stock and invest. Rome was not built in a day… and so is our investments .Most of the portfolios, if not tilted towards being debt heavy, one needs to take calculated risk for the same to be fleet footed and re-allocate in a staggered manner, on the visibility of the green shoots.

Personally, I’m an optimist, who likes to view the “ glass as half –full ”. The recent announcements ( likely pause in interest rate hike, growth of the economy) of RBI and freeing up of savings rate in bank accounts are positive developments . The Eurozone and US, would continue to have its share of troubles. And those are structural problems, with a legacy, which cannot be undone overnight. It will be a long drawn process and accepting it as a part of risk , would be helpful in the investment process.

Invest with an asset allocation methodology and this is a full time exercise.

Wishing you all a prosperous year ahead.

Equity Markets - What should I do ?

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 role of perception in investment

The BSE Sensex rose by 570 points on Monday 29th Aug'11. After losing more than 2000 points in the entire month of Aug'11, what made the markets to rise by more than 3% on a single day . The answer is - Perception ... And perception can change overnight. This time , there was an announcement ( or lack of announcement ) by the US Fed Chairperson on Friday - 26th Aug'11, that the Government should try to create more employment . This created positive vibes all around and the stock indices across the globe headed northwards.

Well... well... all you fundamental folks, perception can be an important tool for making good purchases As Mr. Bufffett retierates, buy when folks around you are fearful and sell when folks around you are greedy.

Rest my case here.... Perception rules along with emotion...