Which button to press; BUY or SELL?

On a lazy Monday morning, stepping in your office lift, you are stumped by a googly form your lift man, enquiring about a specific stock he is eyeing to buy at the bear party at bourses. The sudden upsurge in the Business TV channels & catchy print headlines wouldn’t even spare the last dim-witted. Adding to this is the friends boasting hot profits made from stocks (minus the losses made), that steams the unlearned investors to entry markets. Having said this, still the equity participation in our country is very low.

Investor, learned or otherwise, every time faces the same dilemma, about what investment strategies they should follow to optimize their investment returns in Bears & Bull fight .The answer to this is not a one solution that can be applied by all. The risk & return expectations differ from person to person, so would be the strategies. The investors can use varied combination of the products suitable to his risk and rewards preferences.

For Risk Takers:-

The volatility in the equity markets should be utilise by the risk takers to buy the Blue-chip stocks and high rated Mutual funds, as they would be trading at the lower value. Many HNIs have special funds marked for buying undervalued investments. These allocations just waited for those steep trough of markets to be deployed. The HNI’s are well informed investors and have prompt access to market information and hence they can actively manage their funds.

Such investors also shift profit portions from their satellite portfolios, for allocation to their core portfolio. The point here is also to note that diversification should always be considered. Choosing in between countries and stock capitalization will always benefit. The Top Ups to the ongoing SIPs should be done.

For Risk Averse:-

For the, masses who waited to enter the Equity markets, an uncertain markets would be a window to enter by enrolling in an SIP in a consistent performing equity diversified mutual fund. Those who have a ready corpus in saving banks should move it to a liquid mutual fund scheme & use the STP mode to deploy funds. Such investors should stick to large cap oriented stocks if opting for some exposure to direct equity. It’s said that every dark cloud has a silver lining, so is with the uncertain markets. The inverse relationship of returns between some of the financial products, help investors to immunise their portfolios to yield positive returns.

Needless to say here, that investors should alter their portfolio based on the asset allocation principles & financial goals. At the heart of any investment decision lies the calculation of the risk and rewards available. Faced with many choices, investors choose between different financial products based on their liquidity attitude, risk appetite, budget constraints and performance objectives.