There has been a consensus among product maker, provider, distributor and advisor that somehow you will always make money in long term. That’s the fundamental idea behind selling a mutual fund scheme. Continue your SIP irrespective of market direction and you will sail through all the volatility untouched if you stay long enough in the scheme. I am asking the question, what is your strategy if volatility persist over a long term period?
Long term passive investing is devised for fools, be it investor or advisor, who doesn’t understand or want to understand the nature of the market. There is risk, there will always be risk. Be it long term or short term, risk is not bound by the time, risk does not dilute over a period of time. It’s a matter of understanding on entry and exit points and investing by valuation.
So, why investor and advisor doesn’t devise a strategy to tackle this issue?
It takes time, research and brain to do it. The consensus is to take the easy way out… let’s just recommend them some hybrid or balanced fund 😊
There has been lots of influence by different AMCs over distributor and advisors. It’s a cycle which makes them money and they are pretty satisfied with it. Next time if your advisor ask you to sit in cash during volatile time, consider himself learned. It may not be the best strategy but he got a strategy.
Ask yourself and your advisor… what is the strategy to tackle the volatility in the stock market?
If he replies, just continue your SIP and stay invested for long term then you need to read a book on “How to identify dumb people”.
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