Yes, the market can’t make up its mind. See the chart below.
But that’s how markets are!
Markets go up, they go down and in between they slaughter some investors or create a lot of wealth for others.
The difference in those don’t get wiped out are
- They don’t panic.
- They work with simple rules and have loads of patience and discipline.
- They know why they are investing and rules drive their investment allocations.
Oh yes, they are not Gods. They do feel heady or depressed at times, but then they have to just look at their rulebooks and reclaim their sanity.
Mr Khandelwal, for example, was no stranger to the ups and downs of his blood pressure, moving in perfect sync with the stock markets.
Thankfully, he realised that Wealth Creation works on 2 golden rules.
#1 Asset Allocation
#2 Compounding (aka time aka patience)
Now, rule driven asset allocation guides his portfolio decisions.
Apparently, asset allocation is responsible for more than 90% of portfolio results. In other words, if you get 10% return on your portfolio, 9% is likely due to the exposure to various assets.
He also uses the following chart to get a sense of what is the current best course of action.
Know more about this asset allocation model here that can help you beat the market!
At this juncture, he is staying with the asset allocation he has defined for himself.
The markets may not be able to make up their mind, but he can.
He says, you can too!
Between you and me: Have you made up your mind? What rules guide your investment decisions?
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