Having turned me into a reluctant new convert to the Online Meeting platform last month like millions of others have across the globe, my team has now pushed me into becoming an occasional Guest Speaker at Online Investor Seminars across the country. As was the case when I used to speak offline, the Question & Answer segment at the end of these online sessions too have provided me with a fair insight into investor mindsets and how the prevalent scenario has impacted the behavioural patterns of investors.
Online questions are often more topical. A more popular one I have fielded more than once of late revolved around Gold and the advisability of selling off other holdings to accumulate Gold given its resurgent price. My response has been to remind those investors about the importance of Asset Allocation and how Gold has traditionally been used to hedge equity holdings in a portfolio. While in the near term, an additional exposure to Gold in the form of a Tactical Allocation can be considered given the state of oil prices and the US dollar, I would tend to hesitate to cross the upper boundary I have set for this sub-asset class in my portfolio.
Another popular question from younger investors is about investing in crypto-currencies and here I plead both relatively less interest and knowledge besides being hesitant to invest in a product that is unregulated. I do add the caveat though that I am too much of a dinosaur to know much about this emerging asset avenue and whosoever does so, must do their own due diligence and not invest only because of the periodic spectacular rise in values.
Finally, the question that invariably figures at the end of every seminar is the million dollar one-why are the Indian equity markets rallying even in the face of a raging pandemic, likely shrinking of the economy and an economic revival cycle that is anticipated to be long drawn. Well, the index numbers are a trifle misleading as there is one company with a high index weightage that has raked in the greenbacks, almost on tap over the last couple of months. This has resulted in a sharp surge in its stock price with attendant benefits to the indices.
Then, there is the fact that equity markets thrive on hope and discount not the present gloom but the prospect of a better future six to nine months down the line. With news flows suggesting that there could be some concrete announcements on at least one successful vaccine in the abovementioned time-frames, there is the hope that a big break-out rally may materialize once it is more visible. Of course, it does not take much at the bourses for hope to turn to despair and it is hence that I still stick to the time-tested technique of asset re-balancing to ensure that asset class boundaries do not get stretched when euphoria overtakes rationale.
Financial advice
Ashok Kumar
heads LKW-India. He can be reached at ceolotus@hotmail.com