I write this to you after a week of heavy turmoil and action in the markets Globally and in India. Needless to mention that the markets globally tanked 5 to 8% on the so called ” Black Monday”. the 24th August 2015.
This only led to markets rising and falling again to attain some semblance at the end of the week, though most of the markets ending August in Red.
The Indian markets have been so volatile that the a movement of BSE index 300 to 500 is common these days.
Many of you are investors and have invested for long time wealth creation. The thought that comes to every one’s mind is,
a. Have I chosen the right investment vehicle
b. Is my timing of investments right.
c. What should I do? Stay invested, Add more or redeem everything.
But let us understand Risk & Volatility.
Risk has to be viewed with a time frame. A ‘risk’ in the short term need not be risk in the long term
If you see historic data, the markets world over especially the equity markets have been rising in a time frame of 10 years /20 years. IN the long run, the investments only grow and there is little risk.
On the other hand, what we witness is volatility. This is a short term phenomena and is more on technical. These variations are wide, large and but of short duration. What we are witnessing is short term volatility.
More risk is there when the market is volatile and as mentioned it is in the short term.
Don’t mix Volatility and Risk and if you do, you will exit the market at the wrong time and miss an opportunity to create wealth
There are four reasons why you should ignore volatility and stay invested
a. Inflation in India is very low and is sustained below 5 % and hence favourable. This compares with the deflation prevalent in many other countries and hence advantageous.
b. Being a consumption led country, the global earthquakes of China, Greece are withstood effectively.
c. With fairly strong macros of Fiscal Deficit,, Current account deficit ( on account of crude and commodity prices), and high reserves, currency wars by countries devaluing there currencies like Yuan, are being absorbed.
d. Though not visible and seen, there are activities taken by the government which will yield results in the next two to three years.
While investing, people follow the principle, WYSIWYG ( What you see is what you get)
For a smar investor it is WYDSIWYDG ( What you don’s see is what you don’t get)
Be a smart investor.
Take a look at the stocks I have circulated earlier and some of them are available at attractive prices.
Do contact me for any clarification.