Ignore the war

Our cover story of 'Mutual Fund Insight' for April 2022 is about investing during a time of war. But, to confess the truth, it's not. Only the headline is about war; the story is not. So, are we tricking you into reading the story using a misleading headline? To use the current term, is the cover headline clickbait? Far from it. Let me explain.

As you might expect, this cover story was not something that we planned to carry. But, like so many other things, the Russia-Ukraine war put paid to our original plan for a different cover story. I won't tell you what it is because that story is something that we are still planning to carry after some time.

However, when you read the current story, you will realise that it's not specifically about investing in a time of war. It's just as applicable to investing during any time of uncertainty and upheaval. It's pretty much the same (with a different beginning) that we could have done when COVID-19 first started spreading around the world. Everything that we have written here can be used as a template at any point of the future when there is an externality that suddenly and unpredictably looks like impacting your investments.

Note that I said 'externality'. By this, I mean an externality to the world of business and economy. While wars and viruses impact business and economy, they start as external events. There are other crises that start within the markets, economic affairs and businesses - they require a slightly different template. An example would be the 2007-09 global financial crisis.

In our cover story, you will notice that we have no hot takes on Ukraine or Russia or anything like that, and I'm sure you'll thank Value Research for that. Have you noticed that on social media as well as legacy media, everyone who was an expert on infectious diseases till a month back has now suddenly become an expert on geopolitics and military tactics? How effective would the Russian S400 air defence system be against NATO fighter jets? The same people explaining last month why mRNA vaccines are more effective than adenovirus-based vaccines can tell you all about it.

We at Value Research have no such pretensions. We're focusing purely on the impact on our investment and savings activities and what, if anything, we should all do about that. We're here to tell you what should be your course of action as an investor. I would say that keep reading the news, but don't let it affect your investment outlook. You and I have no way of really looking into the future and figuring out what happens to global liquidity or the conflict or Vladimir Putin's or Joe Biden's state of mind. However, the important thing to remember is that we don't need to know any of this unless we are punters who are investing just for a few days or a few weeks' time horizon.

The good thing is that most of those who read our magazines' columns are not punters but real investors. With all these momentous events playing out, there's little doubt that volatility and perhaps substantial declines will be seen in your investments, interspersed by waves of euphoria. However, the fact remains that the Indian markets are much more resilient to such shocks than earlier. Large domestic inflows into equities, especially from equity SIPs and the EPFO, provide a cushion that was missing earlier. Some hiccups will surely be ahead, but investors would do well to stay focused on the quality of their investments and not shy away from investments.

At the end of the day, if you maintain your focus on the quality of your fund investments, as well as their suitability to your own financial goals, the weeks and months to come are going to actually be an opportunity to keep investing at great value regardless of what else is happening.

Also read: Covid, war and things like that