If you’re underinvested in equity, this market rally must be giving you serious bouts of anxiety. If you sat out the entire correction believing April would offer better opportunities, the markets clearly did not behave as you expected.
Midcaps and smallcaps have rallied sharply in a matter of weeks and seem to show tremendous strength. What if the markets rise further? This seems to be on the minds of those feeling left out of the March correction. Anxiety is rising too fast and people can easily succumb and buy if the markets rise further or show no signs of correcting. But, if you haven’t bought equity yet, the safe option is to wait.
Chasing rising stocks could actually be counterproductive now. This is not a market with sustainable momentum and we can easily see a reversal. Never buy in haste when prices rise too quickly. Instead, the better option is to reset your desired entry level and wait.
If you want to lock into safer returns, start looking at the alternatives. Luckily, the alternatives aren’t all that bad. Debt looks like a fail-safe option with interest rate trends looking strong and only getting better. In fact, returns from debt will hold and possibly even improve marginally from here. You only need to buy the right debt funds with the right tenure.
For the moment, your equity strategy must be very stock specific and diligent. If you are investing in mutual funds, the category has to be right. You cannot buy funds with incorrect positioning or composition. Blindly chasing past performance and buying expensive themes will not be the right approach.
While equity as an asset class is definitely becoming relatively more attractive than precious metals or real estate, it will still need to be approached with caution and correctness. Investors must choose their investments carefully in volatile markets and should not mistake the volatility for sustainable momentum.
We could see sharp swings as the year progresses and the market may offer multiple opportunities to invest selectively in pockets. Investors need to position themselves right to participate in every correction and scale up every investment available at favorable valuations.
Diligent and precise investment decisions are necessary to ensure superior compounding in the coming years. This is not the time to rush yourself under the influence of the fear of missing out. Make your picks patiently and on your own terms.
