We are slowly but surely reaching the end of the Covid19 saga. Such a strange and surreal experience it’s been, something we will remember till the last day of our lives.
The last blog I wrote in April’20 was called – Lockdown lessons for all. Among other things; I stated that the lockdown will be a test of your patience and discipline and prior to that I mentioned that you should distance yourself from your investments. So if you have displayed these traits with your investments in the last 8 months assuredly you would have reaped the benefits of the market roller coaster. Today you would be in a much better place than you were in April 2020.
So why do I call it a boring journey?
Well externally there was so much action in the stock market. There were days when the newspapers and news channels were pessimistic, screaming red, predicting doomsday, etc. and then with the turnaround of the market, the same newspapers and news channels were back to singing songs, being optimistic. This is their business; some call it financial entertainment, as some people enjoy consuming financial news. Your financial plan is not for entertainment, it’s for achieving your financial goals. So ignore all the noise around you.
No doubt, the market was volatile as you can see below
Source – BSE India. https://www.bseindia.com/sensex/code/16/
But for you as an investor it should have been a long, boring yet fruitful journey, you just had to continue doing what you were doing earlier, i.e. Invest. Of course, provided your circumstances were not compromised. However the point is even if you didn’t do anything and just sat tight on your portfolio thru the lockdown you would still stand to gain.
Now here’s the issue, some investors feel that when there’s so much action in the market, the advisors also should be equally busy with the portfolios. They believe that advisors should make changes, or do something, to either protect or make more gains. So I want to clarify at this point that, if you have your asset allocation and investment strategy right in the first place, we don’t need to do anything but sit quietly and let the portfolio do the work for you. Any action taken during such a volatile situation could be detrimental to the portfolio.
Now could be the time to breathe a sigh of relief, peek at your portfolio and see where you stand versus your goals and tweak if required. Mind you, this phase has not ended and could turnaround once again since Covid19 has had an impact on business and employment. That said, Market cycles will come again and again, reasons could be different for each cycle.
So as an investor wanting to build wealth continue investing and stay bored with your portfolio and investment journey.
As George Soros said – If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.