As we approach the Elections results D-Day, stock Markets are hitting all-time high. There are a whole host of diverse opinions being thrown at the investors. The speculation and the cacophony of opinions is only increasing the anxiety among retail investors. Not with-standing the stock market optimism, the question to ask ourselves is, “ Should elections really influence my investment decisions?”. The answer is very obvious, it does not make sense. In the long term the markets would have to go back to fundamentals and keep sentiments in check. All investment decisions should be taken into consideration only based on fundamentals and long term views.
If history is something to go by, we have seen many investors being caught on wrong foot in the past two general elections, both in 2004 and 2009. The outcome of opinion polls was shocking and we have seen many investors lose their hard earned money. The media machine, had been working overnight to build the halo around the results. We are in a similar situation again the million dollar question is should we invest or should we wait?
It is important that we not lose sight of the fact that, it is the fundamentals of the economy that drive markets over a long term. It would not take much to turn around the sentiment, once that happens, who knows where the market will end. As an investor, is that a reason to panic? not if you are in it for long term. Let us remember one thing, any government that is formed would not have a magic wand to solve India’s problems overnight.
It is imperative that investors understand that Elections and their results are short term events. Investment decisions should not be driven by events like Elections but rather by sound reasoning as in any normal situation. It is important to note that Investment decisions should not be based on the results of the elections. It may not be appropriate to ride on sentiments while making investments decisions..
The key to find the right time of investment is to stay invested and keep investing at all levels and don’t let your investments panic. Choose your investment avenues in which you believe and you would want to grow old with them.
We invest to take care of our future and our future is not a single occasion event, it’s a continual process, so why our investments be based on events and sentiments, but should rather be based on our requirements..
Written By Arthayantra