We are living in extraordinary times. This is as far as stock market investing is concerned. From the bubble of 2007, to the crash of 2008, then the rise of 2009, and now the volatility of 2010, so much has traversed in such a short span of time. It just seems like it all happened yesterday.
Let us face it that it is not easy taking a call on the markets today. After all, there are so many factors that are impacting investor behaviour these days. Right from what’s happening in the west (US and Europe) to events in the east (China, Japan), it has all become a complex web of unknowns.
Amidst this, what can an investor really do? Wait and watch, or continue investing keeping the long term perspective? This is a tricky question to answer given that there are surprises coming from all sides. Where is the next surprise going to come from is anybody’s guess. Whether it will be a good or a bad surprise is also doubtful!
Anyway, it all boils down to belief. Belief in India’s long term growth story. And belief that good stocks picked up at low valuations will earn good returns in the long run, whatever the case may be in the short term.
For the optimistic kinds, the belief can be of Indian markets benefiting from the global uncertainty. This is given that low returns in the west can induce more investors to look at emerging markets like India with more seriousness. In this situation, one can expect large scale foreign investment to flow into Indian stocks over the next 5 to 10 years.
Overall, we believe that one can keep investing into equities without taking undue risks. It’s important to not give into timing the market. Rather, one can continue to invest into good quality stocks (available at reasonable valuations) in a systematic manner, bit by bit, month after month.
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