It was in my business school classroom, way back in the year 2000 that the idea of DJIA 30K was first discussed. The Dow Jones was just higher than 10K at that time; so clearly everyone was amazed and even amused at this concept. And almost 20 years later on Nov 24, the Dow did cross this number. Not to be left behind, even in India the Nifty scaled 13K on the same day.
Another interesting statistic: Last 5 year returns of nifty in cagr In March 2020: – 2 % In Nov 2020: +11%
Focus on the controllables
You should focus on your asset allocation and your goals. Most people focus instead on returns and timing the market.
24-hour business channels and social media with so many ‘advisors’ bring with it more noise but not many can differentiate between proper advice and noise. After all even Abhimanyu could pierce ‘the Chakravyuh’ but couldn’t successfully get back. Most investors, unfortunately, fall in this category and they lose out on the best asset category…and end up working for money through their lives.
You should get an expert to help you with ensuring that the right funds are chosen that fit your needs.
Be the Unbiased Expert – The primary role of the expert is to ensure that you stay invested especially during highly turbulent times like in March. In today’s world, there are many such turbulent times.
Asset Allocation – Based on your goals and risk profile, what should your asset allocation be!
Fund selection – Within this, what should be the mutual funds – debt, hybrid and equity. Also what are these funds?
Churn vs Hold – This is one of the most difficult decisions to make and this is where their expertise comes in. If past performance is the only way to change funds, then all one will do is to constantly change funds
Funds’ Performance – Many factors need to be considered:
Fund Managers style
Sectors overweight/ underweight
Fund house view on the market
Regular discussions with the fund team.
Most investors get to point 2 and stop there!! They invest in way too many funds, exit at the bottom and some never get back into equities.
Investing is NOT easy and such unpredictable market moves make it even tougher to predict where the markets will go. So we always advice: STOP wondering where the markets will be. No one could have predicted the V-shaped recovery in the markets. No one did!!