Dhirendra Kumar discusses the long-term strategy investors should follow in the current unpredictable economic environment
Even long-term disciplined investors (investing for last 5 years or so) have lost their money. What is long term now, is it seven to 10 years? What should such investors do now?
This is something which is unprecedented. We are witnessing a crisis which is coming not from the financial markets, but from elsewhere, and has phenomenally affected all dimensions of businesses. So all of this was unexpected and unthinkable. Now I do not know how much time it will be but the answer to this question entirely depends on if we can get over this crisis.
Right now we are taking all pre-emptive actions and precautions. When businesses will restore, it is going to have a major ramification in terms of the way people will function from here on. We are thinking that everything will get alright in three months, and as we saw the panic selling, we will see the reversal and thus a panic buying. But that will not be so. There will be a lot of rejigs that will happen. It is going to impact a lot business models in terms of how people conduct themselves, and the greater efficiency that will follow. But it is all up in the air right now.
It is exceedingly difficult to see where we will be in three months or in one and a half years. But I am hopeful that in a couple of years, all of this will be looked back upon as a bad dream. So we will get over this, but when will it be, we do not know. But with that in mind, I would say that be in a high-quality portfolio and all the time lost will be more than rewarded. While there will be companies which will lose ground and be impaired permanently, there will also be large businesses that will benefit cornering a market share. So there will be winners and losers owing to this crisis.
But right now, in the standstill situation that we are in, it is difficult to visualize a time frame, but yes keep a few years in mind and one will be reasonably rewarded. One important thing is that one should be investing through these times. If you are doing your SIP then continue with it as you will be buying cheap and that will enhance your return.