VOLATILTIY- A BLESSINGS IN DISGUISE

VOLATILITY- A BLESSING IN DISGUISE

While there is all the noise, hue and cry regarding the free fall in the markets which I think is OK. But, I also feel that in every problem lies an opportunity.

And here the opportunity is to increase our wealth by averaging our already existing investments. Now, the crux of all the investments lies in averaging it out when the chips are down, which would help us lower our average cost of investments. Consequently, our average purchase price would become low.

It applies to all investments be it equity, gold, real estate or any other asset class which has an element of volatility involved in it and has a cyclical nature.

So, when the markets are down, we should not try to time it as it is a futile chase timing the market. Rather, we should buy at every lows in the market not at one go but in tranches.

For ex. we can add to our already existing Mutual Fund schemes with every fall in the market. So if we have 1 lac surplus and we are already invested in 5 schemes of 1 lac in each then we should add 10000 to each schemes in 2 sessions of lows in the market and then wait for any other opportunity with any surplus amount.

However a word of CAUTION here is that only an investible surplus should be allocated towards averaging the already existing investments. If one does not have an investible surplus then he/she should be cautious and should wait for opportunity when he/she has got it at some other point in time.

Also, the investment should be done under the guidance of a knowledgeable financial adviser who knows your investment and who is trustworthy as he would be better placed in helping you make good investment decisions.

The same philosophy holds true for any good quality stocks with strong fundamentals and good management which is down and is available at good discount.

So, it is very apt when Warren Buffet says " BE GREEDY WHEN OTHERS ARE FEARFUL AND BE FEARFUL WHEN OTHERS ARE GREEDY.

So folks GO ALL OUT. Its SHOPPING TIME and raining Discounts.

Srinivas Jha

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