Science Is What Will Get Us Across

While the entire world is trying to do damage control by announcing funding and relief, the real answer lies in science. The solution to the pandemic is not going to come through economics but from science. Economic moves can only apply a bandage or act as a pain-killer until science addresses the root cause of eliminating this virus threat. Prime Minister Narendra Modi has yet once again dared to take a bold step. The 21-day lockdown will impact our economy big time but saving peoples’ lives is paramount. I just wanted each of my readers to grasp the gravity of the situation in its entirety and the seriousness of this lockdown. As long as we take care of ourselves during this lockdown period, we have a beautiful future waiting ahead of us.

The solution to this pandemic can come in either of the following ways: a) Medical science develops a vaccine; b) Humans develop a natural resistance to this virus; c) It disappears just the way it appeared. I have full faith in our science know-how as we have solved many bigger puzzles and problems in the past. This will be a no-brainer though it will take its time.

Meanwhile, on the markets’ front, it has turned into a buyer’s delight. It appears the stock market is running a sale offer with discounts of up to 50%. Yet, people are too paralysed to act. Yes, the market has slid drastically and continues to display some weakness. Those investors who have bought a little earlier are regretful about not having waited a bit more. However, I would like to clarify that people who have entered are better off than those who are thinking of doing so as they are likely to miss the opportunity. The person who entered early may make 80% gains instead of 90% post two years. Does timing that 10% extra really matter in this scenario? What matters is missing the entire opportunity and ending up with a meagre 7% fixed deposit gain post two years. Do note that while the fear in people is immense, the return opportunity from the market is also the highest. To gain something substantial, you need to indulge in risks. Period! 

It does seem prudent that you may want to enter when the risk appears less while the reward appears at a maximum. Well, we are at such an opportunity as of NOW! One can argue that this is still not the bottom! Hence, what we are suggesting to you is to not deploy all your investible funds in one go. Plan to spread it over the next 12 to 16 weeks evenly. This process will help you catch the bottom as well as average out very close to the bottom. If you do not do this, you are going to see the prices run away from you when the vaccine or antidote gets officially announced and the Saudi Arabia-Russia spat ends. You will not be able to catch the stock then since the entire world will go on a buying spree and the prices would be over the top at the blink of an eye. Also, at every rise, you will not buy because you have seen a lower value and will want the price to come down to that level again, which by the way is available only now. I leave you with this thought to ponder upon. As for this issue, in the cover story we have discussed how the large-cap stocks have fared and have shared our outlook on the same. The cover story is a ‘must read’ as we have discussed which type of stocks to avoid and where the opportunities lie going forward. In our special story we have explained how best to identify dividend paying stocks and whether such stocks have any potential to beat the markets.

In addition, algorithm trading is picking up in India like in other developed markets. In a special story on algorithm trading we have explained what exactly this term means and why trading strategies using algorithms is gaining momentum. To conclude, I would like to reiterate that the investment opportunity is too big to give it a miss. Move your portfolio to higher market-cap quality stocks for now. And most importantly, ‘stay safe’ and adhere to the lockdown guidance. Finally, what matters in the long run is your own personal well-being. If you are fine, the rest will shine too! 

RAJESH V PADODE
Managing Director & Editor