Single geography, single stock, single fixed income asset, all these are risky strategies said Ridham Desai, MD, Morgan Stanley India in a chat with Udayan Mukherjee, Global Business Editor, India Today Group at BT Market Today Summit held in Mumbai.
He was part of the panel discussion along with Kenneth Andrade, founder and CIO, Old Bridge Capital, Saurabh Mukherjea, founder and CIO, Marcellus Investment Managers and Devina Mehra, Chairperson and MD, First Global where they deliberated upon whether the Indian equity markets will be able to outperform their peers in 2023.
Talking about why diversification is good, Devina Mehra said, India represents 3.5 percent of world's market cap and people should think about global investing and look at all geographies and not just Nasdaq.
LRS allows you $2.5 million to invest abroad. In 1999, Devina Mehra said, we were the first Asian exchange to become a member of LSE because we realise it is not time to be in a single market. She emphasised getting asset allocation right rather than being on the hunt for next multi-bagger.
“You have to look for global investing for long-term financial planning. 30 per cent of your asset should be in the global market. No theme lasts forever whether it is geography, or sectors. 80 per cent of return will come from asset allocation," Mehra added.
Saurabh Mukherjea advised investors to build a concentrated portfolio and stay the course to compound your wealth. "I invest one-third in global markets and two-thirds in Indian markets…We tell our clients to invest in companies that compound cash flow consistently even though their share prices are down," he noted.
Mukherjea added: "In any country, you have ups and down. If you consistently want to compound your wealth, build a concentrated portfolio of high-quality stocks and stayed the course."
Picking a multi-bagger in advance is impossible. Unless you have Warren Buffett's skills, you should stick to index investing, added Ridham Desai.
“Frankly, in my investing experience that India has been an off and on cycle. I haven't seen some formation of the cycle ever take place. So markets headline expensive, driven by a lot of companies that probably belong to a subset of businesses that got extrapolated over the last couple of years. The opportunity, should market demand environment stabilized globally. I think we will fade into the rest of the world and good very successfully in the cycle,” said Desai.
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