Posted By: Admin
Patience & Hope
The last few weeks have been pretty difficult in the stock market. Ever since Russia attacked Ukraine, the Geo politics and sanctions against Russia have increased global uncertainty in trade to manifold levels. The result is that Stock markets globally and in India have seen some of the sharpest corrections since Covid 19 stuck almost 24 months ago. Added to that the indications that US Fed may raise interest rates to curb some inflation effect and reverse the easy liquidity state of affairs has been keeping the equity markets in tenter hooks.
What should investors do ?
It may be relevant to remember the story of Admiral Stockdale ..
Admiral Jim Stockdale, was the highest-ranking United States military to have been captured early in the Vietnam war. Tortured during his eight-year imprisonment, Stockdale lived out the war without any prisoner’s rights, no set release date, and no certainty as to whether he would even survive to see his family again.
Later in an interview he said “I never ever wavered in my absolute faith that not only would I prevail – get out of this- but I would also prevail by turning it into the defining event of my life that would make me a stronger and better person.
His acceptance of the brutal torture yet unwavering faith that this would end is what came to be known later as the “Stockdale Paradox”.
Today as we face an unprecedented crisis in the form of Uncertainty due to the Russian – Ukraine conflict as also the global rising interest rates, the lessons of Admiral Jim are quite valuable and relevant.
All one needs is to keep faith with Equity investments and answer to one question, if the moneys one has invested in Equity is needed within a 12 month period, it makes sense to redeem that investment. However if one is invested in the long term say 3 years or above, we believe that one needs to keep faith that the economy will continue to grow and that the stock markets with arrest the current drop at some point and go back up. One also needs to have the patience that this reversal while may take a few months or more… will certainly happen. The stock markets globally follow the economic growth and as long as India’s economy continues to grow, we believe that equities will outperform in the long run.
So stay invested in your Equity mutual Fund with Hope & Patience.
By Babu Krishnamoorthy
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