Learn How To Tackle Market Volatility From Successful Investors

Learn How To Tackle Market Volatility From Successful Investors

Last couple of years have been quite challenging for investors in equity and equity-oriented hybrid funds. Even those who have been investing through SIPs are seeing negative returns in their portfolios. While handling the current market like situation can be quite tricky for investors, they must avoid making abrupt decisions to protect their financial future. Needless to say, investors need hand-holding during these turbulent times to keep their investments on track to achieve their defined investment goals. 

Hemant Rustagi 
Chief Executive Officer, Wiseinvest Advisors


One of the ways for investors to tackle the impact of challenging market conditions on their portfolios is to follow the advice of some of the successful investors of all times. Although the pieces of advice from these successful investors are obvious, these are often forgotten by investors. Here are some simple, yet effective, pieces of advice that can guide investors to investment success. 

Be Patient- Warren Buffet : 

Warren Buffet puts lot of emphasis on the value of patience in achieving investment success. To resist the temptation to make abrupt investment decisions, Buffett suggests that investors should be patient, both when investing and while holding. 

Considering that there is a slowdown in the economy and the market could take another couple of quarters to recover the lost ground, investors must be patient with their investments and continue with their investment process uninterruptedly. The right way to do that is to keep focus on time horizon remaining to achieve long-term investment goals and avoid getting influenced by short term performance of funds. 

Similarly, making changes in allocation to different segments of the markets during the downturns can backfire. For example, exiting from mid-cap and small-cap funds-especially if allocation to these funds is in line with your risk profile- and reinvesting that money in large-cap funds can create an imbalance in the portfolio and compel you to compromise on portfolio return in the long run. 

Invest in Value - Benjamin Graham : 


Graham believed in buying high quality but undervalued stocks that most of the market was avoiding. Many investors invested in value funds as they were doing very well until a couple of years ago. However, the performance of these funds has taken a beating during the current market downturn and many of these investors are facing the dilemma of whether to continue with them or to exit. 

Considering that value strategy has the potential to deliver higher return than the market over the longer term, it would be advisable for experienced investors to continue with them, provided the allocation is not very high. For those who invested in these funds purely on the basis of performance without realizing the attendant risks, it would be advisable to pare exposure in a phased manner. 

Invest, when the going is tough - Sir John Templeton : 

Sir John Templeton believed that most investors have the tendency of investing when the stock prices are high, whereas they stay away and feel pessimistic when the prices are down. Low/negative returns from equity funds is making investors wonder whether they did the right thing by including equity funds in their portfolios. 

The fact, however, is that investing during these tough times will result in higher than average returns over time. Therefore, those investing through SIP must continue their process as it will help in bringing the average cost down. Those who have a lumpsum to invest for the long-term can also invest in a phased manner over the next 3-6 months. In simple terms, investors get more units for the same amount when the markets are down as compared to the periods when the markets are doing well. Therefore, the recovery in the portfolio from low/negative returns is faster.

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