In much the same way that markets go up, they also come down. Therefore, advises a senior fund manager, if you are a long-term investor and can remain invested for at least a year, don't lose too much sleep. And there are a few good reasons why you ought not to.
The current bear phase, he explains, has nothing to do with the performance of Indian companies. It is, essentially, a function of the trouble in the US. So long as these problems persist, markets across the world will remain jittery and stock prices will remain low. Theoretically, therefore, it is a great opportunity for investors to reshuffle their portfolios.
How you do that, though, depends on what kind of an investor you are. According to a market veteran, if you are a mutual fund investor, staying invested would be a good idea. That's because fund managers are already churning their portfolios to contain losses. When the recovery starts, their gains will be good. However, if you have invested in sector-specific funds, he advises you switch to diversified funds. For instance, the decline in the values of certain sector-specific funds like pharma and FMCG is much higher than diversified funds that have invested in performing sectors.
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