1. It would be naive to imagine that it's always stock market activities that effect equity MFs - it's also the other way round !
2. In fact, equity MFs (domestic and foreign) have a huge short-term and long-term impact on prices of specific stocks - especially when it cascades into a herding activity among fund managers (being humans too !) - as their market prices are a composite result of all buys and sells.
3. Rather than individual market players, MFs and other institutional investors are able to create substantial price movement with their transaction power - and even their stock talks often affect prices in the short term.
4. Moreover, most MFs and institutional investors have a "buy-and-hold", or "sell-and-watch", strategy for investing as per their mandate, causing long-term impact on prices of concerned stocks, unlike individual market players who generally have a "buy-and-sell" strategy for profit booking, and may thus get caught in the undercurrent of these bigger players in the stock market.
5. Therefore, an individual long-term SIP investor, who has a well-diversified portfolio of quality funds, is at an advantage during such "stock runs" - bullish or bearish - because he is able to benefit doubly - from rupee cost averaging of units, and by entrusting the actual buying, holding and selling activities in the stock market to managers of his funds - all done through rigorous vetting procedures - which he can easily "review", "rebalance" and "churn" in case they start failing in his earmarked medium-term and long-term goals !
6. As our market will take some time to achieve "objective maturity", consider the stock exchange as a perpetual sheep market where all types of sheep are bought and sold daily.
7. Everyday, there will be a different "herd mentality" orchestrated by a new shepherd, viz. news, events, results, decisions, domestic and foreign financial institutions, etc., driving all types of sheep into the market or out of the market, at a consideration.
8. Instead of trying to daily predict the "Shepherd of the Day" yourself, it is best to "hire managers" - by investing through SIPs in long-term diversified MFs - who will do this job for you, either daily or periodically.
9. Count your "sheep value" through annual reviews, and if you find your "managers" lagging in identifying "good shepherds" for you that will enrich your "sheep value", immediately "fire them" and "hire" better ones available at that time.
10. At least, you will be assured that in the long run all your "hired managers" would not fail everyday in identifying "good shepherds" - leaving some "good sheep" with you, instead of all falling down the precipice in the daily "herd mentality".
2. In fact, equity MFs (domestic and foreign) have a huge short-term and long-term impact on prices of specific stocks - especially when it cascades into a herding activity among fund managers (being humans too !) - as their market prices are a composite result of all buys and sells.
3. Rather than individual market players, MFs and other institutional investors are able to create substantial price movement with their transaction power - and even their stock talks often affect prices in the short term.
4. Moreover, most MFs and institutional investors have a "buy-and-hold", or "sell-and-watch", strategy for investing as per their mandate, causing long-term impact on prices of concerned stocks, unlike individual market players who generally have a "buy-and-sell" strategy for profit booking, and may thus get caught in the undercurrent of these bigger players in the stock market.
5. Therefore, an individual long-term SIP investor, who has a well-diversified portfolio of quality funds, is at an advantage during such "stock runs" - bullish or bearish - because he is able to benefit doubly - from rupee cost averaging of units, and by entrusting the actual buying, holding and selling activities in the stock market to managers of his funds - all done through rigorous vetting procedures - which he can easily "review", "rebalance" and "churn" in case they start failing in his earmarked medium-term and long-term goals !
6. As our market will take some time to achieve "objective maturity", consider the stock exchange as a perpetual sheep market where all types of sheep are bought and sold daily.
7. Everyday, there will be a different "herd mentality" orchestrated by a new shepherd, viz. news, events, results, decisions, domestic and foreign financial institutions, etc., driving all types of sheep into the market or out of the market, at a consideration.
8. Instead of trying to daily predict the "Shepherd of the Day" yourself, it is best to "hire managers" - by investing through SIPs in long-term diversified MFs - who will do this job for you, either daily or periodically.
9. Count your "sheep value" through annual reviews, and if you find your "managers" lagging in identifying "good shepherds" for you that will enrich your "sheep value", immediately "fire them" and "hire" better ones available at that time.
10. At least, you will be assured that in the long run all your "hired managers" would not fail everyday in identifying "good shepherds" - leaving some "good sheep" with you, instead of all falling down the precipice in the daily "herd mentality".