Uncertainty gets the best out of smart people and gets the best of markets to invest! During uncertain times, investors get jittery and also nervous. Immaterial of what the outcome is going to be that uncertainty kills the markets. Actually news (good or bad) gets priced into the market. And they can move forward from there. Whether you’re talking about an election or some other information, change of RBI Governor, an Indian rate cut or rate increase, a Fed meeting, economic data, uncertainty gets the best of the markets. When you can move past that uncertainty, it has a way of markets can start focusing on other long-term issues.
The best advice I can give an investor who may be nervous about any uncertainty – say demonetisation as of today, or the UP election, or the next Fed meeting, the EU referendum, and so on and so forth is to be a long-term investor. As a short-term investor, those events can certainly rattle markets, and can hurt, and sometimes they can have some lasting implications but I think it’s more important to be a good long-term investor. Think about what your goals and objectives are. Invest appropriately within the asset classes, it may or may not include fixed income or certain parts of the fixed-income market. Invest the money and let it work over a long period of time because this too shall pass. It will eventually come back to the fundamentals. If you’re investing in good countries and in good companies, then you can be confident you should get rewarded.
Over time, assuming it’s being prudently and honestly managed, minimize any potential losses and, hopefully, maximize gains, if there’s some opportunities out there.
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