From a low of around 27,000 plus in March 2020, the Sensex soared to around 85,500 in September 2024. Since then, it has corrected slightly and now stands at around 81,500 (October 16, 2024). Despite this recent correction, there is no indication that the bull run is nearing its end. While this may come as a surprise to many investors, mistakes can be made even during a bull run. Here is a roadmap to help you navigate this bull run safely.
Follow the diversification mantra
During bull runs, many investors, especially those who have recently entered the markets, tend to chase past performance. In this recent bull run, mid- and small-cap funds have outperformed large-cap funds. Many investors may have allocated a significant portion of their portfolios to these funds. In fact, some may be exclusively invested in mid- and small-cap funds. Others may be invested heavily in sector and thematic funds, which tend to carry high concentration risk. These investors should consider a course correction and build a diversified portfolio.
During a bull market, you may hear many experts on television predict that a particular portion of the market will outperform in the future. Ignore them.
What is the rationale for building a diversified portfolio? The most important one is that no asset class performs well all the time. In a sustained bull run like the current one, it may appear that equities always do well, but this is not true. There will be years when debt mutual funds or gold outperform equities. It is difficult to predict which asset class will excel in a given year. The solution to this problem is not to chase the currently outperforming asset class but to build a diversified portfolio, enabling you to capture the returns from whichever asset class is performing well at any given time.
This story is from the November 2024 edition of Investors India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the November 2024 edition of Investors India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
ASK THE EXPERT
Ques. One of my friends told me that your company provides detailed Retirement plans. I want to know what is the procedure to get my Retirement plan. I will be retiring in March 2025. R.P Gupta, Noida
How to Naturally Reverse Fatty Liver Disease
The liver, located on the upper-right side of the abdomen, is the body’s largest internal organ and plays a critical role in detoxifying the blood and processing nutrients.
Banking sector which has underperformed in the last two years, now offers a favorable risk-reward profile
Do you think the market is overpriced? Is yes, should investors refrain from investing in index schemes at the current valuation?
India will continue to enjoy benefits of a close US relationship and trade will continue to grow
Q1. The US elections are said to be one of the closest till date, what impact will the election of a Republican / Democratic party have on the US economy and how is that going to affect India in the short as well as the long term?
Understanding Momentum Funds
Momentum funds are a type of investment fund that focuses on companies experiencing positive momentum in factors such as earnings, revenue, and stock price movement.
Risks and opportunities associated with Small Caps
Small-caps are a stock-picker’s paradise.
How to navigate your portfolio through bull market a
Indian equities have been in a bull run for the past four years.
Choosing mutual fund schemes depending on your age to achieve life goals
The choice of mutual fund (MF) scheme might be influenced by one’s risk profile or age.
Thematic Fund Or Sectoral Fund, Which Fund Suits You?
A thematic fund is a type of mutual fund that focuses on investing in companies based on specific themes or trends.
Be Kind To Your Kidneys
The kidney is a vital organ in our body which is four inches long and two and a half inches in width.