A string of crises | Value Research Since February 2020, the world is seeing a seemingly never-ending stream of crises. Here’s a recipe for investors to move ahead with confidence.
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A string of crises

Since February 2020, the world is seeing a seemingly never-ending stream of crises. Here's a recipe for investors to move ahead with confidence.

A string of crises

There are decades where nothing happens; and there are weeks when decades happen." That was said by Vladimir Ilyich Lenin, one of the founders of the USSR.

There's also an ancient Chinese curse, 'May you live in interesting times'.

Note that this is a curse, not a blessing. As we have all (re) discovered since March 2020, living in overly eventful times gets more than a little stressful. What makes it worse is that the stream of alarming events does not appear to be stopping. This year, as COVID has been winding down, we get the war in Europe; rampant global inflation, along with the attendant threat of higher interest rates; civil unrest created by economic disasters in dozens of countries, including our neighbourhood; and now the idiotic provocation of China by the US establishment over Taiwan.

Frankly, it's a somewhat scary time to be an investor. I guess it's a scary time to be anything but our brief is to talk about mutual fund investing alone, so I'll stick to that. March 2020 looks so far back in time; it really was a different world then in many ways. In the investment world, I have always said emphatically that people who say 'this time it's different' are often wrong and now I'm saying that the world is a different place! So, which is it?

The answer is simple, and the same as it has always been. The circumstances are different, but the principles are not. For things to be genuinely different, we would have to be in a situation where investing in bad companies would make more sense than good companies. It would have to be a situation where diversification would have stopped making sense. It would have to be a situation where always investing in a lump sum would make more sense than an SIP. I can assure you that kind of a time has not arrived, and nor will it ever arrive.

That still leaves you and me with the nervousness that comes from unprecedented events. Even as I write these words comes the news that China has fired its DF-15 short-range ballistic missiles towards the direction of Taiwan. These are part of military exercises but it's still something that has never happened before. We all know that some 70-80 per cent of the high-end computer chips are made in Taiwan by TSMC. What will happen if the Americans push China too far? It's not only worrying, but alarming.

However, that still does not cancel the basics of good sense for investors. No matter how nervous you are feeling about the way events are unfolding, the rules of investing do not change. So, what are your options at this point? Well, it depends on how carefully you have been investing, how well-chosen your mutual funds are and how well-suited they are to your financial goals and your temperament.

It's about confidence
Most importantly, it depends on whether you have confidence in all this. How will you get that confidence? We'll get to that in a bit. If all these things are already in place, then the best option is to do nothing! I know that doing nothing in the face of a severe stream of events is hard for investors to do. Some time ago, I saw this tweet from Nassim Nicholas Taleb where he was talking about vacations: Don't go to resorts where you meet "achievers" on commoditised vacation actively trying to relax. Instead, go to villages (preferably your village of origin) & interact with locals who can teach you how to do nothing when there is nothing to do. Doing nothing is an activity which is not normally associated with success in anything. In fact, it is associated with laziness and failure. That's probably true for most things in life, except investing. If there is nothing to do, then please do nothing!

This goes against the grain of what people will tell you. There are lots of things happening, so you must do a lot of things - that's the normal reaction. You need to have a lot of confidence to face this. Basically, at that point, you need to have enough confidence to look like a loser to other places. This happens time and again. Most recently, it happened when COVID began. Remember the initial stock crash in March? Remember how investors rushed to redeem their investments - even good ones - just to regret it a mere weeks later. Surely, you don't want to do that.

Here's how
However, where will that confidence come from? As I like to say, that's where Value Research comes in - specifically, our Value Research Premium service.

Of all the things that will make your portfolio battle-ready, probably the most important are diversification, and an asset allocation that is suited to you.

Value Research Premium has a set of invaluable tools, again, by far the best that any Indian mutual fund investor would have access to.

Here's a brief description of some of what you will get:

Portfolio Planner: These are custom portfolios that are suggested to you as part of your Premium membership. The algorithm that we have evolved takes into account your goals, your income, your saving capacity and a number of other factors.

Portfolio Analysis: Only a few members are starting their investing from scratch. For most of you, a big question is whether your existing investments fit into your goals? This is often a hard question to answer because there are a lot of implications of switching old investments, not the least of which is taxation. In the Premium system, you can get an evaluation and a suggested fix-list based on our expert teams' inputs.

Analysts' Choice: Often, investors want to choose their own funds for some particular investment purpose. There are over 1,400 available to you and even with the help of our rating system, it's a lot of work to zoom in to the right set. However, that won't be a problem for you because as a Premium member, you will have access to Analysts' Choice. Instead of the 37 official types of funds, we have created eight investor-oriented categories which match precisely with actual financial goals that you have. In each of these, my team of analysts and I have carefully selected a handful of funds that will serve you with the best outcomes.

There's a lot more to Premium of course. So, head over to Value Research Premium, read more details of these features, see glimpses of what Premium has to offer, read testimonials of our members and subscribe at a discount of up to 30 per cent.

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