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Should You Start Investing Or Wait For A Fall?

Posted On Wednesday, Jun 14, 2017

Investors have seen markets taking off lately and it has resulted in immense joy for any investor who keeps a track of markets on a regular basis. The S&P BSE Sensex hit a fresh record high of 31,430.32 while Nifty Index recorded a fresh lifetime high of 9,700 in early trade on 6th June 2017. The Indian market has already gained over 17% so far in 2017. Today, markets opened negatively but ended with 51 points gain as BSE Sensex was at 31,155.

The movement of the markets depends on many factors; news and development that take place in domestic and global landscape. Recently (last week) India's inflation numbers have seen a historically low level (India's retail inflation rate fell to 2.18% in May, lowest since 2012). Industrial production too recorded a healthy growth. As a result, markets reacted positively to such news. But do not forget that markets also react negatively to bad news such as fall in GDP growth.

In short, no matter what market reactions are - be it developments and data, investors should remain invested in the markets till such time as their financial goal is not reached.

Don't be dejected by doomsday theories but you need to be wary about the market fluctuations. Theories and speculations are aplenty but one thing is for sure; no one can predict where the market is heading. Hence, the future is unknowable. As an investor, it is important to know that markets are bound to correct themselves at any time and that the nature of volatility should help an investor score well.

Be 'market neutral'

Investors should not sway to market movements. That's why we would endorse a "market neutral" investment approach for investors. Every tempered investor knows that over a long period of time equities have shown themselves to be among the top avenues to create wealth.

We're not worried about the markets

At Quantum AMC, if you have been following our newsletters, the message put across by the fund managers of Quantum Long Term Equity Fund has been constant: we are market neutral when it comes to managing our investors' portfolio. We, like the rest of the world, don't predict whether the market will go up or down tomorrow, and honestly it does not matter much to us, as our portfolio selection has nothing to do with market timing and the khabar floating around. It is only meaningless noise and doesn't add value. However what they actively monitor is the valuation of stocks. When one of the stocks in their radar hits the buy/sell level, it would be executed regardless of if it was the day the markets hit their all-time high.

Markets work on mass psychology patterns, and in the short term they could defy ground realities. In our view this is what we have witnessed in this rally. Therefore cash levels in our equity funds will continue showing an upward trend as the fund management team's research still indicates expensive valuations.

But this does not scare us. We witnessed a similar situation in the initial years when we had just launched the Asset Management business. The markets, according to our research, were overvalued and our flagship fund would underperform... until the time correction occurred, and then the fund took off! The same thing happened with the initial Modi wave in 2014, followed by the markets crashing.

SIPs are the best way to invest

Ideally, investors shouldn't fiddle with their investment strategy when markets swing. That's where investing in an SIP helps. SIPs help investors to handle the market volatility well. The idea of a SIP is to remove time risk and hence investors need not time the market. An investor will only realize the true value of a SIP by investing persistently. It allows you to stay invested without worrying what direction the market takes.

So we would stick to our guns and wait, until either a correction occurs or our valuations outlook warrants a dramatic revision. In the meanwhile we would, of course, be looking out for buying opportunities that could emerge even in this present scenario. Because we firmly believe in the long term growth story of India.

We'd advise you to do the same. Stick to your guns, stick to your equity investments and asset allocation. Don't fret over fluctuating market levels. Think long term and remain focused on your financial goals.

If you do this, stock markets taking off like ISRO launched rockets won't make you feel like you're missing the buzz. You'd not lose sleep at night, in knowing that these upward (and downward) swings are unlikely to shake your long term investments. You'd have laid the foundation for a solid fortune in the long term future when you have invested with Quantum Mutual Fund. Do consult your financial adviser for investments related matters.

Product Labeling
Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
Quantum Long Term Equity Fund
(An open-ended equity scheme)
• Long term capital appreciation

• Investments in equity and equity related securities of companies in S&P BSE 200 index

Investors understand that their principal will be at Moderately High Risk

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.


Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.