Silver Jubilee of Nifty 50 Index

By Meghashyam Sinkar

Last month Nifty 50 Index has completed 25 years of its journey. Over the years, the Nifty 50 has become the most widely used benchmark for exchange traded products on Indian equity market and helping investors gauge the pulse of Indian capital market.

What is Nifty 50 Index?

Nifty 50 Index is a broad-based index consisting of 50 blue-chip large and liquid stocks listed on the National Stock Exchange of India.

Selection is very fare and depend on the large size of Market Capital of the company. It means Nifty is the Group of 50 top largest member Companies of National Stock Exchange. The stocks having largest market cap and largest volume are selected.

 Sector composition of Nifty 50 across years

The Nifty 50 currently has exposure to 13 sectors. Since Nifty 50 index’s inception, the weights of sectors have changed over time due to evolving market dynamics. For example, the IT sector was not represented at the time of inception, but as of December 15, 2021, it represents 17.9% of the weight in the index. Similarly, weights of stocks from the financial services sector have grown from 20% to 37%, while weights of Consumer goods and Metals sectors have declined from 19.0% to 10.8% and 10.9% to 3.4% respectively over the same time period.

Nifty Performance 

All data are as of December 15, 2021.
Returns data is CAGR returns as of Dec 15, 2021

Calendar Year Returns for Nifty 50 TR index

Data for the year 1999 is from Jun 30, 1999 to Dec 30, 1999. *Data for 2021 is till December 15, 2021

Rolling Returns for Nifty 50 TR index

Data as of Dec 15, 2021

Interesting Facts

  • There are below 12 companies that are part of Nifty 50 since inception.
Reliance Industries Ltd.Hindustan Unilever Ltd.Tata Motors Ltd.
HDFC Bank Ltd.ITC Ltd.Tata Steel Ltd.
Housing Development Finance Corporation Ltd.State Bank of IndiaHindalco Industries Ltd.
ICICI Bank Ltd.Bajaj Auto Ltd.Larsen & Toubro Lt

It means that there is a 24% probability of the bluechip company remaining bluechip over a long period of time.

  • Across 25 years, there have been 101 inclusions in Nifty 50, averaging 4 per year.

We can’t ignore the new sectors, new industries and small-sized companies as they might become part of the Nifty 50. In fact, these numbers might change on the higher side considering globalisation, technology, competition, consumer change of preference and behaviour and innovation in the coming few decades.

Key Takeaways

  1. Sector keeps rotating over a period of time.Therefore one should have core portfolio of diversified mutual fund.
  2. Both bull markets and bear markets are a part of the stock market lifecycle.
  3. In short period , the probability of positive as well as negative returns are high on both the side .
  4. As you increase the time horizon / holding period , the probability of negative returns comes down.
  5. If you hold the equity index for 7 years and more , then the probability of losing money is NIL. Click here to know more on it
  6. It is not the timing of the market but the time in market matters . Click here to know more on it.

Happy Investing !!!

Budget 2021 – Important Things Individual Taxpayers Should Know

  1. No change in tax rates or slabs .

2. Interest on EPF contribution above Rs 2.5 Lakh to be taxable.

E.g. Monthly PF contribution of Rs 20,833/-  ( Annually Rs 2.5 Lakh ) will be in safe zone and will not be taxed . However your PF contribution is Rs 25,000/- per month ( Annually Rs 3 Lakh ), then tax will be payable on the amount above Rs 2.5 lakh, that is on Rs 50,000 in this case. At the current PF interest of 8.5%, that means Rs 4,250 would become taxable. 

Please note : Only Employees contribution is to be considered . 

3. Taxpayers will not be required to estimate their dividend income while making advance tax payments. 

Advance tax will now be payable only when dividend is declared or paid by the company. This will save payment of interest by taxpayer due to underestimation while paying advance taxes. 

4. Maturity Proceeds from ULIP will be taxable if the yearly premium is more than Rs 2.5 Lakh per year.

The tax exemption to ULIP with premium of more than Rs 2. 5 Lakh annually has been removed . Gains will now get taxed in the same rate as equity -oritented mutual fund . 

Notably , the Rs 2.5 Lakh ceiling will be calculated on aggregate premium in case of an investor holds multiple ULIPs . This removes the option of investing in multiple policies to stay below the tax threshold . 

Importantly , this ULIP measure comes into effect immediately i.e. for the policies purchased on or after Feb 1, 2021.

5. Resident senior citizens, aged 75 or above, earning only pension and bank interest income (from the same bank where pension is credited) are not required to file income tax return. On the basis of declaration submitted by such a taxpayer, bank has to compute taxable income and deduct tax thereon.

6. In addition to salary income, bank accounts, tax payments and TDS details, pre-filled income-tax returns will now also include details of capital gains from listed securities, dividend income, interest from banks, post office etc. 

7. Reduced timelines for belated returns and revised returns 

Presently, belated returns (i.e. where a return is not filed within the original due date specified) and revised returns (i.e. where a taxpayer seeks to file a return to correct any omission or mistake in the original return) can be filed before the end of the subsequent financial year or completion of assessment whichever is earlier. For example, a belated return or revised return for financial year 2019-20 could be filed on or before 31 March 2021 or completion of assessment, whichever is earlier. 

It has been proposed to reduce the timeline for belated returns and revised returns by 3 months. For example, a belated return or revised return for financial year 2020-21 would need to be filed on or before 31 December 2021 or completion of assessment, whichever is earlier. 

8. Extension of date of sanction of loan for deduction in relation to affordable residential house property 

Section 80EEA of the Income-tax Act 1961 provides for an additional deduction of up to Rs 1,50,000 in relation to interest on loan taken to purchase residential house property subject to satisfaction of specified conditions. The conditions include the sanction of loan between 1 April 2019 and 31 March 2021, stamp duty value of the house property not exceeding Rs. 45,00,000 and the individual not owning any residential property on the date of sanction of the loan. 

It has been proposed to extend the outer date for sanction of loan to 31 March 2022 for the purpose of claiming this deduction. 

Happy Investing !!

Personal Finance is more Personal than it is Finance

– By Meghashyam Sinkar

Every individual is unique in terms of its needs , goals , risk , upbringing , behaviour which makes their financial decisions idiosyncratic. 

Personal finance has nothing to do with anything outside your own finances. It has got everything to do with how you save, invest, earn, spend, allocate and insure.It is about 5% of economics and 95% of YOU .

If you aspire to be wealthy in the future, you must align your actions today to ensure that you do end up wealthy. It is nothing but aligning your present self with your future self . 

Certainly it is not a one time job.It is an ongoing process. 

To achieve individual’s mandatory, lifestyle and aspirational goals , one has to have proper personal financial planning . Again it will differ from individual to individual based on the financial position of an individual, cash inflows and outflows , asset & liabilities etc . 

Therefore , it is important not to follow others style of investment, financial decisions. Do what suits you and to your financial life .

Finally it is not about products, calculations and returns, it is about YOU.

Happy Investing !!!!!

Why WILL ???

-By Rahul Mone 
 

This COVID- Pandemic has taught us one thing that Life is uncertain. We all know that Death is certain, Life is not.

Creating wealth for our family and future is just one aspect of financial planning. However, the process will be complete only when you decide what happens to your accumulated wealth after you are gone. A wise decision taken today shall be perceived a prudence and wisdom by the next generation. Thus, if you wish to pass on the hard earned legacy, one has to execute it through meticulous planning a succession.

Hence, it is absolutely critical that we should be ready with our plans of transferring our hard-earned assets, Financial as well as Physical to the beneficiary/ies, as per our wish and desire. It is our Succession plan for the distribution of our assets, as per our choice after our demise. If you don’t write a Will w.r.t. assets exclusively owned by you, it will be allocated in a standard way as defined by succession laws- which may not be in sync with your preference.

Many of us think that Nomination is sufficient and there is no need for making a Will but we should know that mere nomination or joint holding is a temporary arrangement, which helps in ensuring to carry out required administration of the estate of the deceased, till the legal heirs take the necessary, formal steps and have the assets transferred in their names. Nominees are in the nature of trustees of the assets of the deceased till the assets devolve upon the legal heirs and /or beneficiaries, as the case may be. Will takes legal precedence over a Nomination and Nomination cannot ensure acquisition of assets.

One of the most commonly used instruments for succession planning is the Will. Will is the easiest and most cost-effective way to ensure the devolution or distribution of one’s wealth. However, it is the only document where the person signing the document is not available at the time of it’s implementation and therefore, it is very critical that it should be made keeping in mind all the details about your assets that you need to be allotted to your successor as per your wish and it should be prepared carefully and envisaging all possibilities.

For making a Will, you can identify one or more person/s  as Executor/s who should be trustworthy, and dependable as he/she/they will be the one who will implement and ensure the adherence to the Will, in your absence. It is advisable that as far as possible, Executor of the Will should not be a beneficiary of the Will. You also need 2 independent witnesses at the time of signing of the Will but the beneficiaries to the Will cannot be the witnesses and this condition is mandatory. Also, it is strongly advised that one  should get a Doctor’s certificate confirming the person(i.e.Testator) who is signing / executing the Will was in a sound physical and mental health at the time of making a Will. 

Moreover, It is strongly recommended to have a separate Will for husband & wife, because if a single Will is executed by the husband & wife simultaneously, then say upon the death of a spouse, the surviving spouse  will not be able to alter the Will to add one’s new family in case of remarriage or exclude any of the children, due to change in circumstances.

 There is no specific format of a Will but it’s advisable to get the legal advice, in drafting a Will due to complex laws and even more complicated legal process and by taking a proper advice one can easily avoid prolonged, counter-productive and expensive litigation, as that is the last thing one intends to pass to the next generation. It is important to state in the Will clearly and unambiguously as to what amount or a share of property is being left for the successor and the reasons for any unequal distributions, if any so as to avoid any confusion or dispute. Ideally, the Will ,should be comprehensive with all details like all Bank Accounts, Demat accounts, Instruments such as Policy, MFs, Bonds etc, physical assets like flat/s, plot/s of land, jewelry, donations to Charitable organizations,  details of your Wealth Manager or Financial Advisor if any. It is also recommended to revisit a Will, every 5 years as the property or assets held could change or even devolution may change.

Will once made can be altered any number of times or in case of minor changes, addendum/s can be done (codicil) with witnesses. However, only the last Will made before his/her death shall be valid and enforceable. 

It is also advisable to get the Will registered or at least get it notarised as many times financial institutions like Banks and other govt. offices don’t readily accept the unregistered Will and are quite reluctant to act on the same The said Institutions/govt. bodies may insist for obtaining a  Probate (Certified copy of a Will by the Court) which is a time consuming process  (upto 1 or 2 years) and legal heirs need to pay court fees stamp  which is ad valorem i.e. a percentage of value of the assets. In Maharashtra, currently the maximum court fees stamp , payable is Rs.1.50 lacs. 

It’s also suggested to get additional certified copies of the Will along with original Will. The original should be sealed and should be kept with the Executors. Additional copies may be kept with persons whom you think should be in know of the same in your absence and even the beneficiaries can have a copy of the same.

Some people prefer Institutions as Executors instead of any individual person/s. There are some private family offices and some Banks and Financial institutions who act as Executors and help in drafting and executing a Will by charging fees.

Another option is setting up of a Family Trust. In this case also, some private firms, Banks and financial institutions act as Trustees and Executors. Sometimes, Family Trusts are created to protect the assets from getting attached / liquidated in the event business goes bankrupt. These are generally done by high net worth individuals or for persons who cannot handle their finances on their own or for the benefit of special children. They handle the expenses required for the maintenance of the beneficiary, manage their Funds and tax related issues as well charging some fees.

When there is a WILL, there is always a way………

Happy Investing !!!

26AS Reloaded

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Recently, the Income Tax Department introduced some key changes in Form 26AS  . What used to be a simple tax credit statement available to every taxpayer is now a complete blueprint of your high-value financial transactions. Let’s see what all these changes are .

What is the Form 26 AS?

This is a statement from the tax department which mentions the tax deducted on behalf of a taxpayer. It also mentions income for which an individual might have sought tax exemption during the year. All taxpayers are given a Form 26AS.

What is added from this year ?

From this year, the Form 26AS has a new Section E which mentions specified high-value transactions conducted by an individual during the financial year. These transactions include:

  • Open FDs of more than Rs 10 lakh.

  • Pay credit card bill of more than Rs 10 lakh by cheque and more than Rs 1 lakh by cash.

  • Buy bonds of more than Rs 10 lakh.

  • Buy mutual funds of more than Rs 10 lakh.

  • Buy shares of more than Rs 10 lakh.

  • Offer shares for buyback of more than Rs 10 lakh.

  • Buy foreign exchange of more than Rs 10 lakh.

  • Buy Property worth more than Rs 30 lakh.

  • Get bank drafts made of more than Rs 10 lakh with cash.

  • Deposit more than Rs 10 lakh in cash in savings bank account.

  • Deposit or withdraw more than Rs 10 lakh in cash from current account.

Please note that these are cumulative amounts. You could be doing separate transactions, but the total amount for the financial year will be taken into account.

E.g. If you have SIPs of Rs 20,000 in five different funds, the entire Rs 12 lakh invested in a year will get reported.

Where can you get it ?

You can log in to your tax filing account and view it. You can also access it through your Netbanking account if the account is linked to your PAN.

What are the implications?

  • The aim of income tax department is to match the consumption & investment patterns with the returns filed by the taxpayer .
  • The taxpayer now can view the information in a consolidated manner which helps in filing the returns in error free manner and to avoid further questions from income tax department.
  • Honest tax payers need not to worry now .

And lastly , since it carries lot of financial information , suggest not to share it with unknown person .

Happy Tax Filing !

Knowing ≠ Understanding

An American engineer , Destin Sandlin, who did an experiment with a bicycle . The handle bars are rigged to turn in reverse. If you turn the handles to the right, the front wheel goes left and when you turn the handles to the left, the wheel turns to the right.

Check out the below video to know what happened next 

 

This experiment is a great example of cognitive bias . A human mind is full of biases which affects his decision making process and hence the outcome.

We experienced loss aversion bias during March 20 sell-off where investors dumped the equity to avoid further losses.  Investors then tend to loose the focus of objective or goal for which investment was made and succumb to different biases .

Knowing the equity or for that matter any asset class  & the return patterns by doing all data analysis may not translate into a positive investment outcome .You have to be aware of your own cognitive bias and its potential influence on your behaviour in order to achieve the financial outcome that you desire .

Hence knowing is not equal to understanding & desired outcome .

Keep unlearning and learning !! Happy Investing !!!

Covid Kavach Insurance Policy

IRDAI had recently mandated insurance companies to offer short-term health plans that will cover hospitalisation expenses related to the treatment of COVID-19 . This will help individuals to buy specific health cover for meeting hospital costs due to coronavirus .

Covid Kavach is an indemnity plan which pays for hospitalisation .

FAQs

1) I already have health insurance cover , then do I get any benefit by opting for this separate Covid Kavach Policy ?

It is more comprehensive policy on COVID  because it covers homecare, PPE and treatment of co-morbidities when hospitalised which is not covered under normal health insurance policies.

2 ) Should one go for individual or family floater policy ? 

Considering the cost towards covid treatment , it is better to go for individual policy as the maximum sum assured in this policy is Rs 5,00,000/- only  (Rs Five Lakhs only ) .

Secondly , Covid is very contagious and the entire family may be affected.

If one member of the family gets infected , then chances of getting infection transmitted to immediate family member is high and both ( more family members ) may need hospitalisation .

3 ) Which company policy should one go for ?

Since it is standardised policy, the features are the same across all the insurance companies . There is hardly any difference between the premiums amongst all insurance companies . As of now , 29 insurance companies are offering the Covid Kavach plans .

We suggest Star Health & Allied Insurance Co Ltd considering their wider presence across Maharashtra State as well as at nation level. They are number one medical insurance company in terms of individual policy holders ,focused only on health and its related insurance .

4 ) Is home care treatment expense covered ?

Yes but maximum upto 14 days and when the Medical practitioner advices the Insured person to undergo treatment at home . It should have daily monitoring chart , medical practitioner continuous active line of treatment . Refer the brochure attached below for detailed wording .

5 ) Policy Period and waiting period for Covid Kavach ?

Policy Period : Three and half months (3 1/2 months), six and half months (6 1/2 months), and nine and half months (9 1/2 months

Waiting Period : 15 days from the date of commencement of this policy .

6)  How much is the Hospital Cash Amount payable under optional cover benefit  ?

The Company will pay 0.5% of sum insured per day for each 24 hours of continuous hospitalization for treatment of Covid following an admissible hospitalization claim under this policy.

Please refer the brochure for more details and premium amount by clicking on below link

https://mcusercontent.com/af529c40e3f98b76ae87e393b/files/c0b32b98-2e61-4c20-8b36-6a64387630f8/Corona_Kavach_Insurance_Brochure.01.pdf

Please drop the mail to us for further queries .

Stay Home and Stay Safe !

Team Pentagraph 

An Attempt To Answer Few Questions

We are experiencing unprecedented times of our life . There are so many questions running through the minds of investors in current situations.

This is just our attempt to answer to few questions .

Q) Is it a good time to buy equities / good time to enter into equities ?

Nobody can predict the market top or bottom exactly. We don’t know frankly whether markets have already bottomed out or would bottom out in next few months. But after such a sharp fall in prices, risk-reward is in favour .It is good to enter at these valuations . Sensex figure in itself has no value . It is just the number . What matters the valuation of underline businesses . The market would be expensive at 21000 in 2008 and would be reasonably valued in 2013 at the same level of 21000.  We are currently at the valuation where most of the macro factors give green signal to add equities like Marketcap to GDP , Price to book value , Price to earning . Now , the market may bounce back  ( which happened in last week where it rebounded by 20% from lows ) or may dip further or may remain range bound for relatively long period of time. It is totally based on the how investors respond to the information or misinformation .

However , the current valuation definitely build the strong possibility of making good returns in coming years .

Q) Should I stop the SIP ?

Stopping the SIP in such market defeats its main purpose of averaging . The SIP works on rupee cost averaging which work best in such cycle of market .  It allows investors to buy more units of a mutual fund when the market is low and reduce the per-unit cost of investment.  This discipline approach helps the investor to buy more units when prices are low and less when prices are high. And long term approach harness the power of compounding as well .

On should stop the SIP in current situations if

  • There is uncertainty over income of an investor
  • There is not enough contingency funds for next 1 year .

If an investor has steady income and can afford to continue the SIP in current times , then it is his/her favour . Discontinuing the SIP due to panic is more harmful than continuation in long term .

Q) Should I act now or should I have acted earlier or Should I exit to avoid further losses ?

Investors tend to only hear about “looming” market doom during such periods and “imminent” market growth during optimism.

This is the reason that Equities have been more volatile than other asset classes. The high volatility has often led investors to try and time the markets, by exiting and entering at their perceived opportunities.The chart signifies the importance of staying invested, as missed opportunities can significantly dent long term returns.

The above chart clearly shows that the best action is no action . Simply being patient and non action lead to more gain than getting into action on diversified portfolio of Sensex.

Although successful market timing may improve portfolio performance, it is very difficult for an investor to time the market consistently. In addition, unsuccessful market timing can lead to a significant opportunity loss. The chart shows comparison of annual returns and returns assuming the best month has been missed.

Good investing is not about making great decisions but about consistently not making mistakes. 

The graph also reveals that the history of volatility is quite common and it is very natural . This volatility is the one which helps equity to generate higher returns than other assets in long term . Volatility does not mean the market is broken or something is wrong . Here the challenge is to think , act and stay long term .

Thats why Warren Buffett nicely quoted Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”  

Q) When will market recover ? Will there be V or U shaped recovery ? What analyst is saying ?

The hard truth is that no one has any idea about this . No one ever knew earlier during past events and no one is going to know in future for any events . There is no doubt that this is unprecedented event in the last 100 years. It is Blackswan event . First time in history, world has a common enemy to defeat. The ultimate question to be asked is that “Whether this virus will wipe out the mankind?”  . 

If the answer is NO then businesses will come back . We will overcome this for sure as every top brain in the world is after solving this issue. So have faith .

That reminds Benjamin Graham quote

“Without a saving faith in the future, no one would ever invest at all. To be an investor , you must be a believer in a better tomorrow.”

Happy Investing & Stay Safe !!

Mythology & Money

During this unprecedented time and nationwide lockdown, one unexpected thing happened . Ramanand Sagar’s epic series ‘Ramayan’ returned back and getting aired on Doordarshan with the aim of keeping the country indoor which used to happen 33 yrs ago during the episode.

While catching the glimpse of series  , I came across an episode where Kaikeyi demanded the exile of Rama.

The brief story goes like this 

King Dasharatha, Rama’s father, decides to give his throne to his eldest son Rama . Everyone seemed very happy & pleased except Queen Kaikeyi – Rama’s step-mother, the king’s second wife. She wanted her son Bharata to rule the kingdom of Ayodhya . Because of an oath (Praan jaaye par vachan na jaaye’ sort of ) , Dasharatha  had made to her years before, she got the king to agree to exile Rama for fourteen years and to crown Bharata.

There are two lessons which i can relate to financial world from this part of Ramayana.

Importance of WILL & Trust : –

Human behaviour is unpredictable specially during emotions of fear , insecurity . You can see How Kaikeyi became insecure of loosing the status of Rajmata and about her son’s future .  Dasharatha  pleaded with her not to demand such a request but couldn’t stop her . She was scared that if Ram went to become King, Naturally Kaushalya ( Rama’s Mother ) would be Rajmata and she would be subordinate to her . This gave her lot of insecurity inspite  being an intelligent , loyal and she trusted Rama more than her own son Bharat .

Had there been a legal system at that time ,Dasharatha could have formed a trust and made Ram as main beneficiary .

But it is available in today’s time . It is very important , yet highly ignored & given least priority . Wealth Distribution is the 3rd pillar of Financial Planning after Wealth Protection and Wealth Creation . One can make a WILL or form a trust to avoid such unexpected surprises.  In fact, it is not always about dispute . It is important for the smooth transfer of the wealth to legal heirs or beneficiaries .

One can give a time to it now during this lockdown and prepare the handwritten will if not done earlier and then register it once life comes to normalcy.

Committing without thinking :-  

It’s Dasharatha’s commitment given to Kaikeyi which got him to this trouble . Same thing is observed in financial world . Lot of investors sign up for traditional insurance or unit linked insurance plan and commit huge premiums for long period of time without proper understanding of the investment products , thier future cash inflows , their cash outflows towards financial life goals . Any sort of sporadic cash inflow puts an investors into trouble as premiums have to be paid and one can’t exit the product easily as it comes with lock in conditions .The event like current one of global pandemic may create pressure on income . The person having low financial commitment can sail through this event without any emotional & financial burden.

Our Mythology gives lot of lessons on spirituality , life , management , behaviour & so on . However, there are many such lessons which one can relate to personal finance & money management and learn from it to make sound financial decisions in life

Happy Investing !!

It is quite natural to get Anxious and Panic

We have seen unprecedented pandemic outbreak in last couple of weeks . The Novel Virus – Corona has already taken thousands of innocent lives and still shows no signs of weakness.

As for the markets, the pandemic of coronavirus has shaved off nearly a third of the global market cap. India is no exception . Our Markets have corrected by nearly 30% . And it was in short period of time .

It is quite natural for an investor to get panicked and get anxious .

When market drops , that financial loss fires up your ‘amygdala’ – part  of your brain that processes fear and anxiety and generate famous “flight or fight” situation . So it is normal , just accept it .

In fact , the brilliant psychologists Daniel Kahneman – Nobel prize winner  and Amos Tversky have shown that the pain of financial loss is more than twice as intense as the measure of an equivalent gain . Which means that the magnitude of loss of Rs 1000/- is more than double that the magnitude of gain of Rs 1000/- .

Losing money is so painful that many people ,terrified at the prospect of any further loss , sell out near the bottom or refused to buy more.

The ideal way of sailing through such situation is : not to act in panic . Observe the situation & let it evolve on its own . It is perfectly ok to have no opinion or views on the same. Because no one knows. It is unknown territory .

Lot of damage is already done across markets in anticipation . No one has any clue on how things will unfold in coming day.

However , past experience of market gives the evidence that things come back to normal sooner or later ….be it Tulip Mania 1673, South Sea Bubble 1711, Spanish flu in 1917 , great depression in 1929 , Black Monday 1987 , Asian crisis 1998, Financial meltdown 2008 and many more . The reason , the magnitude and the recovery may differ from event to event . But it comes back to normal .

Indian market have also experienced such shocks earlier .  Some of them have shown below in tabulated form .

The data suggest that a long term horizon is essential to profit from equity as your losses can be undone if you simply stay put .
One can argue that this time it’s different …but it is quoted as most dangerous words in investing by Sir John Templeton, legendary investor. 

There is no argument that COVID-19 has no national boundaries , no social bounds.It’s already disrupted the economic lives of billions of people. It doesn’t care what you believe or who you pray to or how much money you make. It is hitting hard to everyone .But, as saying goes , it is not what happened matters , what matters is how we respond …whether it’s life or investing .

Equity valuation has come to good and attractive level . We suggest to add more in equity , rebalance your portfolio . However, we need to make sure that one has to have enough surplus to take care of next at least 10-12 months liabilities and household expenses . This is anyways the first part of financial planning i.e. Contingency planning . However, you revisit it your numbers before you commit any money to equity .

And Don’t worry about further downside of 10-15% but think of missing out future potential upside of 40-50% .

Sharing the extract of Warren Buffett 1987 letters to shareholders describing Benjamin Graham’s the famous parable of Mr. Market 

He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.
Even though the business that the two of you own may have economic characteristics that are stable, M􏰄r Market’s 􏰑􏰋quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains.

At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another enduring characteristics : He doesn’t mind being ignored . If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

 Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.

Benjamin Graham writes in his book  “The Intelligent Investor” –

􏱆Basically , price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market.

In equities , darkest times offer the brightest opportunities.  Albert Einstein said it rightly “In the midst of every crisis , lies great opportunity.”

And finally everything is not about money, markets and investing. Stay safe. We wish you and your families the best of health and happiness at all times.

Happy Investing!!!