Life after the #CoronaVirus in equity markets:
Its still early days as #CORONAVIRUS continues to wreak havoc on equity markets worldwide, shattering confidence
and destroying wealth of investors simultaneously. However this too shall pass is what one can say at this juncture.
Its still early days as #CORONAVIRUS continues to wreak havoc on equity markets worldwide, shattering confidence
and destroying wealth of investors simultaneously. However this too shall pass is what one can say at this juncture.
Having said that, there is a section of investor society which thrives on such corrections irrespective of they being a natural calamity(प्राकृतिक आपदा)or Man Made Crisis(मानव निर्मित विपदा) by investing at the fag end of such said corrections as one gets good bargain for money.
But that section of investors have experience in doing so and simply replicating them may not be right for everyone. Even at lows, there are stock which are bad and will continue to remain bad if prices of the same recover along with the markets after the end #CORONAVIRUS mayhem
The real challenge will be to pick stocks in this mayhem and initially when a bounce occurs, it wont be surprising to see the bad ones outperforming the good ones. Its only after first stage of bounce is done & dusted, the good & bad ones will start separating like water & milk.
This is where, Relative strength can play a vital role to help investors pick the stronger candidates & avoid the weaker ones. Looking at the standalone charts won't help as most of the charts may suggest a bearish outlook after a beating of 10-20-30-40% over a period 1-5 weeks.
These are not the times when degree of correction from the peak should be the only barometer for any stock (good bad and ugly are metaphors to relative strength and weakness) to be included in the portfolio. Adding a layer of checks & balances can certainly be of utmost help .
In a market which is falling across the board without any bias to market cap, stock picking can become easy if we adopt a process to out stock selection even during such times. Pick stocks from diverse sectors in one rule but keep your portfolio concentrated to 10 stocks at most.
Your stock should do well over next 12-24 months irrespective of how the Govt. & Central Bankers respond to the economic draw down caused by the #coronavirus. Your bets are on the prospective market recovery and not on Govt. & Central Bankers aid. So think hard before investing.
Along with sectoral diversification, diversification by mcap can also be helpful. How does one achieve mcap diversification is totally dependent on his/her risk appetite and there is no magic formula here. Be prepared for more downsides after you are fully invested in markets.
This is not a trading portfolio, so please dont get carried away by the short term returns to your investment genius, they will get normalised as time passes by. After market normalises, review your portfolio especially with the relative strength to evaluate whether you have
accidentally invested in some bad apples & if yes, then weed them out without hesitation or guilt, even if they have delivered the highest returns in your portfolio.
Lastly, don't make this portfolio public. Its your hard work & don't give it in charity for masses to replicate
Lastly, don't make this portfolio public. Its your hard work & don't give it in charity for masses to replicate
