This document discusses how investors tend to buy stocks at higher prices and sell at lower prices, contrary to basic investing principles. It notes that demand for gold typically increases when prices are lower. The document argues that current market declines present a buying opportunity, as valuations have become attractive. It recommends that investors evaluate their asset allocation and make long-term, diversified investments in equity funds to benefit from lower prices and India's continued economic growth over the medium and long term.

1. An Initiative of Team Central
Best returns are typically onBest returns are typically on
investments made in bad times !!!investments made in bad times !!!
The Time is NOW !!!!The Time is NOW !!!!

2. AnInitiativeofTeamCentral
Rule for Investing…!!!!
 The Basic Rule of Investing :
 “ To buy when the valuations are attractive
and to sell/not buy when they are not.”
 Investor’s Investment Pattern :
 Although the rule is very logical it is seen that
majority of investors, especially when it comes
to equities end up buying at higher prices and
selling/ not buying at lower prices !!!!

3. AnInitiativeofTeamCentral
Investor’s Investment Pattern - Equity
 When the market was low – net inflow in equity is negative i.e. investors were selling equities.
 Whereas the inflow was at peak when markets were all time high !!!!!
 and has again fallen sharply in line with the market correction…
 Eg., in CY2002 when Sensex was around 3200 levels, inflow into equity MF were Rs 4517 Crs
 Whereas in CY2007 when Sensex was inrange of 14000 to 20000 inflow in equity MF were as high as
Rs 1,07,189 Crs.
Believe it or not, but investors were far more willing to buy equities at higher
rather than lower prices !!!!!!!

4. AnInitiativeofTeamCentral
Investor’s Investment Pattern - Gold
 There is a sharp contrast in the investor behaviour while investing in Gold
as compared to that in equity…
 Demand for Gold increases when gold prices are lower !!!!
 And relatively remains stagnant/falls when price rises……

5. AnInitiativeofTeamCentral
Contrasting Behaviour in Gold & Equity
 People buy more Gold when it is cheaper
and less when it is expensive !!!
 It is the same set of people who actually
buy more equities at higher prices and
avoid them at lower prices!!!!!!!
 Isn’t it interesting ???

6. AnInitiativeofTeamCentral
Reason for Contrast – Time Horizon
 Gold is not bought with a view
of selling it in near future
 We rarely sell Gold hence
people are not worried about
further fall in prices of Gold in
short terms
 Infact with further fall in prices
more Gold is purchased as it
becomes even cheaper !!!!!
 Similarly when prices go up,
demand is reduced because it
is perceived to have become
expensive.
 Equity is associated with short
term investment, short term
gain/losses
 Therefore NAV/prices are seen
everyday
 Feeling generated is the falling
prices would further fall and
the rising prices would
continue to keep rising….
 Thus fear of losses or
prospects of gain in short run,
lead many not to invest in the
down market and to invest in
the rising market !!!!!

7. AnInitiativeofTeamCentral
 How many of us are aware of the today’s
value of the Gold holdings in our own
house ?
 If no, then why track the NAV – daily ????
 Such investment strategy is unlike to
generate decent returns over a long run
 In fact for some it can be –
“DISASTROUS”“DISASTROUS”
A Question to self !!!

8. AnInitiativeofTeamCentral
Equities – A Superior Class !!!
 Equities have given significantly higher returns than Gold in the past !!!!!
 Inspite of recent correction the returns for Investments Equity for 20 years is
 17.16% pa as compared to Gold’s return @ 9.62% pa !!!!
 Rs 100 invested in both Gold and Sensex 20 years back would be now
 Rs 2375 in case of Sensex & Rs 628 in case of Gold

9. AnInitiativeofTeamCentral
Sharp fall in market – An Opportunity ?
 Currently the equity markets have fallen ~ 30% YTD !!!!
 This is neither the first or the last fall the equities will experience !!!!
 Equity is a volatile asset class for short to medium term
 Investors need not fear volatility (just as in case of Gold)
 The fall due to problem in economy is temporary in nature…..
 Fall in the market should be looked as an opportunity to buy more…
 As it allows us to buy the same assets at cheaper rates !!!!!

10. AnInitiativeofTeamCentral

11. AnInitiativeofTeamCentral
Current Scenario and Challenges !!
 With 30% fall in market from Jan 2008, fwd P/E have fallen sharply and are
now at reasonable levels…

12. AnInitiativeofTeamCentral
Bargain Valuations available only in
challenging times !!!!
 Key is to figure out whether challenges are temporary or long lasting
The current challenges faced by Indian Economy largely due to
 Simultaneous spike in oil and steel prices
 Inflation, higher interest rates,
 High fiscal and current account deficits etc.
 Over the time this would get resolved
 Either would be passed to the consumers
 Or the prices would come down
 Or both
 Once this happens,
 Inflationary pressures, interest rates, deficits are likely to moderate, growth
rates should improve and market should follow !!!!!!!!!!!!

13. AnInitiativeofTeamCentral
 The current challenges faced by Indian Equity Market is also due to the
sentiment loss because of
 FII have withdrawn their Capital around 34000 Crs from the Indian Equity
Market
 Market may further see a correction @ 10%
 As against only Life Insurance Companies have invested over 55000 Crs
in the Equity Market
 Some other bodies investing in Indian Market being MF houses,
Corporate houses, Brokers & Traders, HNI and retail investors etc
 As a result the fundamentals are very strong and the lost sentiment can
be regained soon…
 As a result demand will suddenly shoot up
 And market will cross 15000 level while we keep waiting for correction and
we’ll have no time left to invest and get benefited.
Bargain Valuations available only in
challenging times !!!!
When the valuations are high, prices are low…..When the valuations are high, prices are low…..
If not now then when shall you buy !!!!If not now then when shall you buy !!!!

14. AnInitiativeofTeamCentral
Recommended Course of action !!!!
 Evaluate your current asset allocation
 Figure out what percentage of wealth you can put asides in equities
 Have a medium – long term approach (min 5 years)-The only reason why
insurance companies suggest a free surrender after 5 years as if you take
any block of 5 years it is always given a positive returns at around 19% pa
 Invest in diversified equity fund and benefit from professional management
and portfolio diversification !!!
 Finally, be patient. Stay the course !!!!

15. AnInitiativeofTeamCentral
Conclusion
 Perceived risk and actual risk seldom go hand in hand !!!!!
 While in Jan 2008, at index levels of 21000 the perceived risk was low
 Whereas the actual risk high !!!
 Now after the sharp fall in the markets
 The risk reward of equity investments in India has improved remarkably compared to Jan
2008
 The perceived risk is high, whereas the actual risk is low!!!!
 India’s long term secular growth story remains intact
 Despite challenges in the short term, India remains the 2nd
fasted growing economy in the
world
 Huge local markets, favourable demographics, high saving rates and rising salaries driving
domestic consumption, underlying strong capex cycle and several large scale projects, the
economy should continue to remain one of the fastest growing economy’s in the world for a
number of years in the future
 In view of the above
 Ignore the overall pessimistic environment and invest
 Investments made at these levels should generate above average / attractive returns over
medium to long term !!!!!!!!!!
Best returns are typically on investments made in bad times !!!

16. AnInitiativeofTeamCentral
…!!!!!H a p p y S e llin g …!!!!!H a p p y S e llin g