Sentiments of greed, fear, and confusion are transient in the equity market. The sentiment cycles are permanent. Most of us have come across the following chart of the sentiment cycle. For those who are uninitiated, the below chart represents the cycle of greed and fear in any asset class with varying degrees of emotions. Sentiment cycles move from one extreme of greed to another extreme of fear which takes valuations also to extremes from their…
Don’t fight the forces, use them. – R. Buckminster Fuller Everyone thinks that due to the recent events caused by Coronavirus we are in uncertain times. I believe we are always in uncertain times. The emergence of any event has multiple co-dependent factors and nothing gets created out of a vacuum. Since we cannot know and control all the factors that lead to the manifestation of any situation; we cannot be 100% certain about any…
We have heard this phrase many times that time in the market is more important than timing the market. Time and again we hear this from many in the investment industry. Instead of blindly following the saying without putting much thought, let’s delve deeper into its wisdom and understand how relevant it is in the current scenario. In the last two decades, rising income levels has provided resources, education provided skill-sets and rapid advancement in…
Investment management is never a part-time activity but a full-time job. Quality investment management is much more than selecting schemes from star-rating websites or buying a stock based on little insights. It requires not just sophisticated skill-set for asset allocation calls (across asset classes, sub-categories, and schemes), the temperament to keep emotions under check but also an ability to quickly understand the impact of the latest market developments (global and domestic) on various asset classes…
What we have learned from history is that people don’t learn from history. And that is the reason why a majority of investors do not earn good returns from their investments over the long term. Those who make superb returns on their investment are good students of market history and have learned the lessons quite well and stick to it. There is no denying that equity markets go through a cycle. Broadly we can call…
Have you ever wondered why your relationship manager is always eager to recommend buying an equity or balanced mutual fund scheme and rarely recommend switching to debt mutual funds? Did it occur to you why the new fund offers (NFOs) with no track record are pushed while schemes with similar objective and verifiable track record are ignored? Why are close-ended funds peddled when the investment objectives can be met by open-ended funds with an option…
An ideal portfolio objective must capture risk and return objective of clients very clearly. For long-term investment success, risk and returns both play a crucial role. However, the risk is more important as it is in our control, returns are not. Unfortunately, for an average investor returns become more important in a bull market and risk becomes more important in a bear market. For seasoned and successful value investors, it is opposite; risk becomes more important…
Indians are very good at buying stuff which can offer best value for money. We would buy clothes when there is a discount sale. Many rush to buy groceries in Big Bazaar on Wednesday. We are happy to enjoy happy hours in bars and prefer visiting restaurants which offer great experience compared to prices paid. Majority Indians buy cars made by Maruti as they think it offers best value for money. We seek for the…