Let us UNDERSTAND one very important thing. We are in a sweet spot as far as returns are concerned, says P V Subramanyam
Photograph: Justin Vidamo/Creative Commons
All experts tell you that you should be greedy when others are fearful and you should be fearful when others are greedy. Brilliantly said. The question to ask them is 'should I be buying or should I be selling?'. Fair enough a question.
The chances are that they do not know the answer.
Assuming that they do really know the answer, then, they are NOT SAYING IT because their management has a different view and these guys are stuck. Like Taleb says you cannot trust a guy who has to work for a living. So what should you do?
Am I willing to stick my neck out? For a person like me who has a 'buy and hold only' strategy the question of market timing does not really arise but I have been sitting on some super multi-baggers and it may be worth my while to decide what to do with them. Let us UNDERSTAND one very important thing.
We are in a sweet spot as far as returns are concerned.
In the past one year, we have all seen our portfolios soar from anywhere like 40 per cent to 100 per cent depending on how loaded your portfolio was. In most of our portfolios the Infra stocks have not done too well and many of us may believe that it is the time for the Infra funds to perform. However if you had banking, NBFC stocks you have done brilliantly well.
We have the 10 year Axis bank returns far superior to ITC returns and that is saying a lot about the run up of the banking space.
So first of all, TEMPER YOUR EXPECTATIONS.
If you got 50 per cent return on your equity portfolio, remember what I have been screaming all along. Equity should give you about 12-14 per cent per annum return (given current inflation rates) so be ready to EARN NOTHING OVER THE NEXT 3 YEARS.
Even that should not make you sad. The market has given you the next 3 years + returns in advance.
Many people with a shorter duration can even remove the money and keep it in some kind of a liquid form, but this is a slippery wicket.
If your duration is less than 3 years, surely 50 per cent should come out of the equity bucket. I could even argue for 80 per cent in a market like this. What you have here is an over-optimistic market. Hey it could even get higher. Be careful!
