My investment strategies for the last quarter

A lot of investors are a worried lot looking at the market performance in September. It has been exceptionally poor and completely contrary to what most experts thought will happen. I had thought that after the smart recovery in August, September will be similar performance though a little muted. In reality, the market has tanked quite a bit and as of now does seem to be in a strong bear grip.

I think the next quarter is going to be a challenge in terms of the markets and unless there is some very good news on the economic or political front, I do not see any good recovery happening. Specific to the Nifty, the resistance level of 11150 is very strong and the support level of 10800 or so is not so. As such it is quite easy for it to slip down to lower levels and even breach 10500 easily. As far as my own portfolio goes, it has taken a big hit recently, going down by 15 % over the last month or so. Given that my portfolio in both stocks and MF is substantial, the absolute level of loss is a staggering one. However, given the fact that I do not need to redeem any of these investments in the next few years, I am not too worried about the impact on my net worth just yet.

So the key question for me is how do I plan to change my investment strategies for the next quarter. As I see it, despite the ongoing mayhem expected to continue, this is a real good time to invest in quality stocks. This is also supported strongly by the asset allocation principles, where you need to move some money from debt to equity. With this broad strategy as the base, here are the actions I will take.

  • Look at investing in Mid cap and Small cap MF only for the next quarter out of my active income surplus. I think these make more sense as compared to large cap or multi cap MF right now.
  • So far I was using any FMP redemption this way – use the capital gains for my regular expenditure and reinvest the Principal amount into some other FMP or Debt fund. In the changed situation, I will invest the principal amount into stocks or some close ended MF that seems potentially good to me.
  • Any other income such as interest from tax free bonds, dividends from MF schemes, dividends from stocks etc will be used to make selective purchases into my stock portfolio. There are a lot of stocks available at very attractive prices and it will really make sense to take advantage of these over the next few months.

In short, though it is a tad painful to see a lot of red in my portfolio over the last 2 months, I am rather optimistic and excited about the opportunity presented by the current markets. As I do not have to depend on my earnings from here in the short term or medium term, I believe I have time on my side. The key attribute will be to identify good companies that will hopefully stand the test of time, at least the next decade !!

As an investor, you too should look at your situation and figure out how you want to get things done. Whatever your strategy is, keep asset allocation in mind and take advantage of the current and future market levels. For the markets, things will definitely get far worse before they get better – but that is also an opportunity that you must seize.

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One thought on “My investment strategies for the last quarter

  1. I want to invest in shares of 10 Mid Cap companies with clean financials/balance sheets, competent promoters, & huge potential in future especially with MOAT which are attractively valued at present. Can you please help me in finding out those 10 gems?

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