Make Money, Not War!

While the last few months have passed by with discussions about how the market rise will tend to slow down or stall owing to tapering, high inflation rate or the new corona virus variants, no one would have expected the Ukraine-Russia war jolt that has shaken the foundation of the market with the index correcting near about 17 per cent from its highs. This is the true power of the equity markets and why it continues to be so very challenging. Money can be made and lost in a jiffy. Hence, there are best practices that have been learnt over years of experience that help us to keep our subscribers on the better side of the curve if not each but most of the times.

Yes, presently the situation looks extremely pessimistic. There are talks of crude oil jumping to USD 200+ per barrel. The rupee is expected to breach an important level of Rs 80 per USD and nickel has jumped to record high as the world witnesses extreme price moves on the London Metal Exchange. Such extreme commodity price behaviour is surely making the equity bulls more than nervous. With economic risks attached to the rising crude oil prices, many foreign brokerages are busy downgrading Indian equities and the FIIs may continue to sell in the near term.

However, with the Sensex at its low 50,000 levels and the Nifty at its low 15,000 levels the moneymaking opportunity is back. There have been debates lately whether the year 2022 will yield as much returns as the last two years. With the recent corrections and the levels being touched, this appears to be likely for the new monies that will get invested at these levels. However, is this the lowest point the market will touch or are we looking at a much bigger fall? Wasn’t this the same question many of you asked yourself in March 2020 when the Sensex was sub 26,000 when the pandemic issue exploded?

This fear held most of you back and you saw monies made by others right in front of your eyes in the months that followed. A second opportunity could not have come so quickly, but here it is. Yes, the markets can worsen if the Ukraine-Russia conflict does not resolve soon or moves towards a World War III scenario. One cannot deny any such possibilities. However, we believe this scenario is controllable by humans unlike the unknown virus that shook the world during the pandemic. The stakes involved in the current war affect a large number of countries and economies. Therefore, sense is likely to prevail amongst the leaders, if not immediately but at least in the near future.

And when it does, the markets are again going to bounce back with a vengeance. Thus, we would advise our investors to continue to ‘buy’ through this opportunity. However, keep a minimum of three years’ timeframe in mind though gains could come much earlier. To emphasize the importance of long-term investing and understand how the risk and reward ratio can be improved drastically just by increasing the investment horizon, we have our cover story explaining in detail the merits of longterm investing.

I am sure several myths on long-term investing will be cleared after reading the article. I sincerely hope the information helps you in shaping your investment strategy for the better. In our special story in this issue we have discussed in detail how inflation is impacting the economy as a whole and the equity market. The special story also explains why inflation need not always be negative for the equity markets. Be agile, be courageous, be prepared to play for the long run and grab opportunities knocking at your door. Moreover, stay tuned with us as we uncover the developments and opportunities that the changing market scenario will unfold from time to time.

RAJESH V PADODE
Managing Director & Editor