Everybody, his aunt and her poodle has a view on the market. So experts who have NEVER invested in the markets, to people who have 99% of their net worth in the market are now saying what to do.

  1. Market is at an all time high (fact)
  2. From an all time high, market can only go down (hilarious)
  3. This is a liquidity driven rally (fact, all markets are driven by  money, right?)
  4. If you are a new investor you should book your profits (complete bull shit)
  5. You should play safe by Trading FnO rather than investing (its a dealer on the other side, and loves activity)
  6. Markets are not backed by EPS (either prices or earnings, one will always be ahead of the other)
  7. If EPS does not increase, prices will fall (motherhood statement, completely useless gyan)
  8. Liquidity driven rallies can crash any time (awww….another amazing bull shit)

So what should the retail investor do in such a market. I think the following advice is eternal:

  1. Take a deep breath, and brace yourself for lesser returns going forward.
  2. If you have got 20% return in your equity SIP, be ready for 2% returns.
  3. Remember the long term return on equity fund expectations should be around 12-14%
  4. Regression to mean and standard deviation are worth learning, if you do not know
  5. If your GOAL is 7 years or more, equity is the place to be in.
  6. If you are afraid of equity, do your SIP in funds with 65% equity, at least the debt portion is also tax free
  7. Understand that asset allocation is an INVESTOR prerogative, and your advisor has very little role to play.

Let me tell you the kind of questions that I am asked, and I have no competence to answer:

  1. Sir I have done Rs.2oL  investments in equity funds,  it is worth Rs 28L should I use that amount to make a down payment to buy a flat?
  2. Sir I have Rs. 45L in equity funds, and now I have Rs. 4L more to invest, should I invest in such high markets?
  3. Should I sell all my equities, shift to a debt fund and wait for the PE of the market to come down?
  4. If interest rates are at their bottom should I withdraw from debt funds?
  5. If equity markets are at their top, and interest rates are at their nadir, what should I do with my money?
  6. Should I withdraw from my equity (debt) funds to repay my housing loan?
  7. This is my investment portfolio, is it ok?

Well each of these questions have an answer which takes me half a day to answer. Before answering this question, I need to ask 20 other questions, and then and only then can I attempt to give you a CONFUSING answer with a caveat and a maybe. Not worth our time, right?

Repeating: My circle of competence is very small unlike many other people I know.

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