Greed and fear – our 2 big enemies.
Greed is going to cost you and fear will destroy you.
Greed wants us to take big bets with the market (sometimes erasing the line between speculating and investing).
Fear wants us to hold back with “what if I lose my money?”
Some investors can be zen like and live through it all.
If you are stuck with greed and/or fear, then the answer to your dilemma is either portfolio diversification or portfolio insurance.
Diversification will spread your money across assets and aims to provide a return with less volatility.
Portfolio insurance will create a floor beyond which your portfolio doesn’t lose value. In fact, it may gain.
You have to pick your poison. Else, greed and fear will rip you apart.
Let’s talk about the market now.
Interest rates have almost peaked. In fact, the 10 year govt bond yield is now at 7% approx. It went to as high as 7.47%.
April and May (so far) let markets have an impressive upside.
But don’t get carried away by any of this.
As an investor, who is looking to fulfil near term, short term or long term financial milestones – provide for kid’s education, buy any asset or create a retirement corpus – make sure the investment choices are aligned to these goals and not to some fancy presentation.
Don’t be too aggressive. Also, don’t stay out of the market. Follow your asset allocation.
The May 2023 market is telling us to the same old thing.
Baaki to aap swayam samajhdar hai!
PARANJI RAMAN RAVINDRAN
HOW IS THE UNDERWEIGHT AND OVERWEIGHT CALCULATED?
WHAT IS REPRESENTED IN X AND Y AXIS?
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