What I have said applies for equity MF, mainly. When the invested capital is large, and if the markets don’t deliver for extended periods of time, investors may feel like they would have been better off, if they had invested in debt than in equity. This is the reason why for goal oriented investing, rebalancing is suggested, so as to protect the accumulated corpus, particularly when the time is less. If a stock can rise by 15% in a day, it is also true that it can fall by 15% in a day. The allure of 15% in a day, 100% in 6 months is fantastic, but the reverse is also true. This aspect is not made clear to many investors, what goes up will come down is not mentioned as much as, it goes up. GFC decimated wealth, and today’s tech is far more powerful. On the contrary, as Keynes said, markets can remain irrational more than we can remain insolvent. So the music may very well continue for a number of reasons. So a permanent change may have started, as participants are becoming informed.
Stocks are a different thing, as we know. Each company is different w.r.t to the business it is in, growth, valuation, demand etc. And even if majority of sectors are not performing, there could be some activity going on in selected sectors, there is a chance of getting some profits there. And if the PF is diversified, it can perform better even when the indices are down.
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