[Must Read] Markets will Correct 📉
- Central Banks have almost achieved their objective of controlling inflation through tightened monetary policy. Though the CPI is inching lower, asset inflation is resurfacing through stock prices and real estate.
- Many listed companies that came out with the quarterly numbers are nothing good to talk about. Growth and profits are subdued and for small and mid caps the numbers are decimated but the stocks are still trading at a historical premium.
- Analysts will once again start downgrading the earnings forecast and that will start the downward momentum. Once again people will undergo the "Flight to Quality" effect.
- No of Bankruptcies is steadily increasing
- No of Job openings are trending lower
- Most of the US listed firms that have borrowed at a lower interest rate in 2021 are coming up for renewals this year. By the time they refinance, they will be doing it at a higher interest rate which will impact their PAT as a result their EPS estimates will take a biting.
- Gold looks attractive from a market cycle standpoint.
My Recommendation:
- Have an emergency fund for at least 6 to 9 months to cover your expenses.
- Exit overvalued small and microcaps stocks. Move to a reasonably valued large cap.
- Have health insurance for you and your dependents.
- Move out of small cap mutual funds and have some allocation to debt funds.
Let me know your thoughts.
I hope 2025 turns out better.
Man, not one month of 2024 has completed, and hoping for a good 2025. Tough times!
Tough times in the job market especially for entry level talent and certain skill sets that have suddenly become over valued owing to the excesses of 2021 and 2022. The Indian economy however is booming and will in all likelihood continue to do so for most of this decade as we make the most of our demographic dividend.
It is fine, you don't need to end on a positive note. We all know how well we are using the demographic dividend.
Whether to cash out small and mid cap or not depends on your horizon, if your horizon is 3-5 yrs, stay invested and take benefit of correction.
However i dont agree with this analysis totally, this scare is going on from a long time. Market has its own cyvle and it's hard to predict with current macro and micro economic situations. So stay safe but wait and watch before making a call.
I would incline on this framework. I started investing in direct equities from the bear market of 2012 and this time is never different. What makes the market interesting is the different views of the participants. At the end of the day it's our money, our conviction. :)
The least I can do is to book the overvalued pockets and move my money to safety. When the correction comes, I can deploy patiently. :)
Not listening to anybody who predicts market movement.
Nothing is happening till elections 🙂
FIIs have initiated the profit booking. Inflows are negative.
That happens because FIIs have Jan-Dec cycle. They create liquidity in Jan for the remaining year.
Agree Agree Agree
There has been over optimism which has led to the recent rally. We need to temper down