The markets are strong and as they rise investors like you are tempted to jump in. So the question is, should you do that? And if you do so what should be your strategy? And how should you calibrate your investments over time? We speak with well-known investor Jyotivardhan Jaipuria, Founder and Managing Director of Veda Investment Managers.
Jyotivardhan Jaipuria says that everybody wants lowest risk and highest return, this never happens. You have to decide the risk-return profile you are comfortable with. This varies with person to person, it varies with time. There may be times where we are very risk averse, there may be times where we are very happy to take higher risk. So, some of you have to decide, and it's not something like you keep changing every day - when the market goes up, you take more risk and when the market goes down, you take less risk. Decide that this is the sort of this return profile I'm comfortable with & build your investments accordingly. But never forget, asset allocation is key.
He also says that one struggle is finding a company which will do well. Then from an investor point of view is not just that this company does well, but as a minority shareholder, do I do well? Theoretically, if the company does well, then we'll do well as a minority shareholder. But not everybody's got the same attitude to a minority shareholder. Does the management think that the money which is made belongs to the management or does it belong to the minority shareholders? Do they give dividend out of it or do they keep retaining? If they retain it, and they invest in businesses good, but sometimes it's a very toxic issue when a company is generating too much cash, which is not being paid.
Watch BOOM's Govindraj Ethiraj interview Jyotivardhan Jaipuria on asset allocation, risk management and corporate attitude towards minority stakeholders that will eventually determine our financial future.