While evaluating any fundamentals based investment specifically in cyclical.sectors, the parameters remain the same irrespective of the market levels.
But a time stop is often advisable because if there is a sharp counter trend correction or an actual reversal and beginning of a major downtrend, sector rotation theme will have slim chances of working.
About allocations, nothing much changes. But allocation remains high where there is higher certainty of earnings growth. During sharp market correction, everything is hit, but if bull market is still on, the latter group will make a surer and quicker comeback.
At some point of time, when froth is clearly visible (we are somewhere near it, but mkts can continue to look frothy and still go up) certain amount of cash buffer can be created… Creating cash and then sitting patiently on it is also a difficult job psychologically…
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