Finally the D-Day has arrived, it is 23 May 2019 – General Elections were held and now the counting of votes has started.
Karan👨🏻🦰 and Arjun👨🏻 are glued to their TVs awaiting the results. Both of them are investing regularly in Mutual Funds.
As the results keep coming in, Sensex is going through a roller coaster ride. After opening at a record high, the market has fallen more than 1000 points, the results are not as per market expectations.
Karan is investing for the long term, he will require the money in 2025. However he is worried, he had expected that Sensex will go through the roof and that his portfolio’s value would rise sharply. However, Sensex has now fallen close to 1500 points. Karan decides he has seen enough and decides to sell.
Arjun reminds him that he is investing for the long term, so this is actually a good opportunity for him to invest at a lower price.
👨🏻 “You shop for clothes when there is a sale going on. You bought your car at the end of the year – December to get a good deal. Now why are you selling instead of buying?”
👨🏻🦰”Yes you are right, I should rather invest a bit more than I usually do while sticking to my asset allocation.”
Back to the present – If such an opportunity does arise, What will you do?
In the long run, it is only earnings growth that drive stock market returns. There will definitely be short-term volatility due to this mega event as observed historically. But on a long-term basis, it is nothing more than noise.
