In a
meeting with my investor clients last week, there was long discussion regarding
which asset class is the best?
As
currently all real estate investors are very happy with their real estate
investments. Almost all agreed to one asset class. I.e. Real Assets
I am
happy if investors earn from whatever asset class they have invested in…..
In
conclusion of the meeting, my statement to all was as per below:
In
1980’s BSE SENSEX was introduced with reference to 100, which is now around
17000 level. It shows 170 times growth in 32 years. A very good performance
indeed!!! The gold and real estate have also given very good appreciation to
the investors as well taking the same period on account.
So
my advice to all was very simple.
The
asset class whichever is preferred by investors performs only after given time.
If investor fails to wait, than he gets disappointed with the poor performance
which is for a time being only or he
sells the asset in desperation & jump in to other shining asset & try
to chase the returns which is already left & may miss earning opportunity
of both asset class & most possibly he may loose the money.
The
key take away is “Give time to the investment instead of timing the market “
In
last 10 years,
There
was great time for all asset classes like
2003-2007
– We have seen 5 times growth in Equity Sensex.
2008-2012 – Gold & real estate have given
great returns.
If
investor understands the Economy cycle of ups – downs & if he rides this
curve smartly, he can earn smart money. Others with patience & cool and
long term investors will also earn handsome returns. Those who try to chase
returns & entering at top price of assets are most likely losers.
Even
at current sensex level of 17000, investors are in panic & in no mood of
investing in equity. Most of their funds are invested in fixed investment
opportunities & thankfully there are very good interest rate opportunities
available for investing in Fixed Deposit like HDFC Ltd. & GRUH FINANCE and
Debt MF schemes like FMPs & BOND FUNDs are also getting attention of
investors.
SBI
DYNAMIC BOND FUND, UTI BOND FUND & TEMPLETON INDIA CORPORATE BOND
OPPORTUNITIES FUNDS are also some schemes where investors are looking
investment opportunities due to tax advantage & its fixed income nature.
However
the burning issue is, should one invest in equity now?????
I
think one should invest in equity at current sensex level in the range of 17000
to 17500. However, investor should first see his risk profile, better not to
jump in equity in single stroke & he should try to understand the possible
loss if invested in equity.
The
equity has not performed in last 5 years. Equity sensex is at a level where it
was before 5 years. So, it is better for investor to find out how much risk he
can take & then he can enter in equity.
As
advised earlier “Give time
to market”.
