Thursday, August 17, 2017

LEARNINGS FROM THE SUDDEN FALL IN MARKETS LAST WEEK

Greetings,
Last week, the Stock markets took a sharp sudden fall and left many investors shell shocked.
It was an unexpected fall for many as Markets were going on smoothly with everything looking honky dory

Two things led to sudden sharp fall.
1. The Rise in Doklam Border Tension with China
2. The Shell Companies issue raised by SEBI.
Now, look at these two images...



This Client started investing just about a month back. She had done a single investment last Nov and then restarted only last week. 

Last week's sudden brutal fall hit the portfolio valuation hard and showed a loss of Rs.7500/- and a negative CARG of -4%. 

Its obvious that the client would get upset on seeing a RED portfolio especially wherein one Fund is showing a CAGR of 33% and still the overall portfolio is showing a negative 4.1%!!
And as expected, I got a message from the client that there are rumours of war with China and whether I should be moving ALL the funds to debt
I just said "WAIT"!!!!!!!!!!!!!!









Now, watch this image. 
Just 1 single day later. 
The Portfolio has moved from a loss of Rs.7500 to a Profit of Rs.13700 and a negative CAGR to a positive CAGR of 7.3%. 
All in a matter of one single day!! 



Point is...

1. Negatives are inevitable (its a part and parcel of any business including Equities)

2. Equities is NOT for Short Term. Never was. Never will be. 

3. Positive Growth is a given. Equities have outperformed all other asset classes by a reasonable margin but the problem is VOLATILITY. 
You have to bear with it. 

4. When the Investment is LONG TERM, why should you even bother to look at your portfolio??
You will only be increasing your BP. 
So, bear with the volalitility. Enjoy the Ride. \

5. Stick to Asset Allocation. Stick to Good Quality Funds. Invest in Funds which are aliging to your Goal. 





Learnings : 
1. Dont watch your NAV/Portfolio Daily
2. Dont listen to CNBC/ETNOW experts. They find pleasure in making you nervous. 
3. Take the Advise of a Good MFD/Advisor who will guide you after looking at your Goals.
4. If the Horizon is Long term, treat the Falls as an Opportunity to buy Quality Funds at lower rates and reduce your overall Cost of Purchase.  

Relax. Enjoy the ride but be warned the ride could be bumpy.


And, of course, DO NOT TRY TO TIME THE MARKET

Image result for goodfundsadvisor fall

And let the MAGIC OF COMPOUNDING WORK to your advantage. 
BEST OF LUCK!!!!!!!!!!!!!!!!!!!!!!!!!



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