Every samvat teaches us something. This samvat was one of the most interesting ones. It started with the US presidential polls and quickly unfolded into a year of unexpected events. When we encounter so many volatile phases, how we respond to them matters a lot. To respond correctly, we must be adequately prepared. This is not as easy as we usually believe. To respond to such volatility, we need to position ourselves.
Positioning is so important for every investor in such a year. How we position ourselves in our portfolios matters especially when we encounter the kind of volatility that we did. To achieve this, we need a broader sense of valuations, a sharper assessment of risks, and a clearer sense of the opportunities.
To simply wait and watch would be inadequate. This is not the time to spectate and hope for the best. We need to decisively act on the right opportunities thrown at us by the volatile swings of the market. What happens if we just stay put, assuming that the market would revert to its old thinking? We could end up getting caught sitting in the wrong place while the market swiftly shifts its focus.
This samvat saw the market move away from its favourite sectoral themes of the previous samvat. Yet, indices did not move their focus and held their ground where monies were directed. Even where the flows were the strongest, this didn’t quite deliver returns. What exactly happened? Money went into the expensive parts of the equity market and prevented them from steeply falling. But the returns were generated outside equities in the most unexpected quarters – precious metals.
Were investors positioned to capitalise on this shift? We sense that this could have been far better. But as we end this samvat, we sense that a lot more needs to be done on our positioning within equities in the next samvat. Thanks to the strong domestic flows, we got away lightly in the last Samvat. But history has a lesson which we must no longer ignore. We need to take a closer look at portfolios, turn them directionally around to face the future opportunities, and reduce risks where swift action is warranted.
The new Samvat is a good time to begin a new phase in our investing with much smarter portfolio positioning. The time to do it is now.