As we have been communicating during last few months, the Indian markets continued to trade weak in the month of Aug. Few economic indicators like Automotive sales and GDP growth numbers point to domestic slowdown in the Indian economy. Some of the global events like deepening of USA-China trade war did not help either. Logical question that would come to anyone's mind is that how deep is this economic slowdown? Is this as bad as the recession of 2008? How long will it take to come out of this slowdown?
The economic slow down/recession is a normal phenomenon and part of the economic cycle. Government has introduced many policies and taken measures to revive the economy. These policies may or may not work in the short run. However, in the medium to long run, markets will certainly come back and reward the patient investors.
As per Benjamin Graham, the intelligent investor should lookout for opportunities to buy low and sell high due to price-value discrepancies that arise from economic depressions and market crashes. We also believe in the same. The intelligent investor should not worry about the short term volatility. If possible, when the market goes down, he should invest more in equities which benefits him in the long term. Else, he should continue his periodic investments like SIPs etc and re-balance his portfolio to a slightly higher tilt towards equity with the help of his financial advisor.Continue reading »