Capital Allocation Key To Success When Market At All-Time High!

Capital allocation when the equity market is at its life highs can be a strategic decision that may decide how fast your money grows. Asset allocation, we all understand, is the key to wealth creation in the long run. What should be your capital allocation strategy when the equity market is at all-time high? Yogesh Supekar with the help of sectoral trends provides direction on the optimal capital allocation decisions

- Yogesh Supekar

With markets at all-time highs the most intriguing question that majority of investors have in their minds is whether the rally is going to continue or is the trend going to reverse from the top? Most importantly, investors must decide if it is worth taking some money off the table or should one deploy more cash into the equity markets at this juncture? Says Abhay Kulkarni who has been an active investor in the markets: “I started investing aggressively in the equity markets late last year i.e. 2020 because I sensed that the equity markets will outperform. I switched or reallocated some of my long-term portfolio money from fixed income securities and gold to equity.”

“I was proven right because gold prices fell and I made more money in equity than I would have made in fixed income investment. In hindsight it was a masterstroke. Now I am faced with a similar dilemma. As markets have gone up so high so fast, I am wondering if I should take money off the table from the equity markets and park again in a fixed income portfolio and even gold for that matter. While I am a long-term investor, the current level in the markets is what is making me think of reallocation. But then I don’t want to be in a situation where I sell my quality stocks only because the market is at all-time highs and then repent my decision if the market heads higher,” he adds.