Home / Markets / Stock Markets /  ‘50,000 is just a number; one must stick to asset allocation’

With the Sensex touching the 50,000-mark for the first time, Mint kicks off ‘Sensex and me’, a series where finance professionals and ordinary investors document their lives alongside the Sensex in all its ups and downs. In the first instalment, Malhar Majumder, a Kolkata-based mutual fund distributor and partner, Positive Vibes Consulting and Advisory, a firm that distributes financial products, narrates his journey since the early 1990s.

Neither new highs nor steep corrections bother me. Sensex reaching 50,000 is nothing more than a number. I let asset allocation take care of the volatility.

It took me almost a decade to become what many would call a “savvy" investor. During the period (1996-2006), I traded stocks based on news, tracked market movements passionately, and lost money.

My first equity exposure was in 1992 when an uncle made me invest 2,000 in SBI MMS90 scheme. I thought it was a stock even though it was a mutual fund. The fund’s net asset value (NAV) went from 10 to 160 in no time.

A few months later, however, the Harshad Mehta scam broke out, wiping out most of the gains. Nevertheless, I managed to sell the investment at a profit of 8,000. But the quick money that I made got me interested in the stock market.

Like many novice investors, I thought the stock market is a quick way of becoming a ‘crorepati’, a popular term to denote a person’s networth is over 1 crore.

Experiences that followed are common to the journeys of many other “savvy" investors. As soon as I started working, I read books on stock investing, learnt technical analysis, and began trading. When I made profits, I thought no one is as smart as me.

In 2001, however, I suffered losses in some stocks when the dotcom bubble bust. A year later, I changed jobs and shifted cities and sold off stocks that I had accumulated over time.

When markets started rising from 2003, I realised that I had made a mistake. I would have reaped huge profits if I had held on to those stocks. The regret went on for a year. I decided to remain invested for the long term instead of trading.

Trading in stocks made me realize that investors can make money in equities only if they remain invested for the long term.

I evaluated and consolidated my mutual fund portfolio, which I had for about seven years.

In 2005, I became a certified financial planner. A year later, I was advising clients on their investments while also conducting training for bankers and employees of mutual fund houses.

When markets corrected during the Global Financial Crisis, most of my equity investments were through mutual funds. I stuck to the asset allocation plan, which yielded results a few years down the line. The crisis had put my beliefs and financial planning fundamentals to test, and they worked.

Since then, I am dispassionate about market movements. I am not even worried about correction going forward, and would continue to stick to asset allocation.

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