September 25, 2010 10:35 am
Sensex @ 20k, Nifty @ 6k, Is there more steam left.
Should we continue to hold or book profits? Will there be another crash?
I like what Ankur says , and it makes sense if you want to be involved in the over all game , but for people who are not game players , it would be a good idea to make sure their asset allocation is not streached too much on one side and they rebalance their portfolios .
So rebalancing should happen at particular date irrespective of market conditions . 1 time in 1-2 yrs
I think whether you are long term or short term you should continuosly book profits. Someone rightly said that profits if not booked today can be erased tomm. A very close friend of mine had bought Tata steel when it was around 300…it went upto Rs 900 but he did not sell it and look at where it is now. though he kept getting dividends regularly. Take example of Suzlon where it was and where it is now. I am sure these are some of the examples. So I am in a habit of booking profits as someone told me that is the best thing to do.
read following two recently posted articles by subra, it will clear confusion
Goal based investing…a must
Sell the poorly performing shares
well said..! i agree with you
Answer to this question will vary from individual to individual. I think it depends on your time horizon, your investment goal and, more importantly, your stomach to withstand volatility.
In absence of any details from you, I will just tell you what I am doing. I have invested in market for long term with a view to accumulate enough for retirement. That gives me time of at least 15 years. Markets are over valued now. But, I am not in the game of timing the markets. I believe that broad earning growth of Indian companies over a long period of time will be 15% to 18%, in line with nominal GDP growth. I will stay invested for capturing this growth. Yes, markets may correct anytime. However, I am used to such roller-coaster ride.
I will sell in three situations: First, if my investments appreciate enough to meet my goal for retirement. Second, if interest rates on bank FD are such that my after tax returns are at least equal to inflation, that is double digit return. Third, market valuations reach extreme like 50 times earning. In this last situation, market would have discounted earning growh for very long term and there would not be any point in staying invested.
Hope, I am able to answer well. If you provide more details on your individual circumstances, it will help to answer specifically.
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