When
we started our advisory practice over fifteen years ago, the most critical
information, local or global, tended to flow in a fairly straight line. The
most important news was announced first through a press conference/press
release, followed by an analysis on television and in the print media on the
implications of the event. Most announcements appeared to be well thought
through and deliberated before being released in the public domain and
reversals of decisions taken were less common. A large number of our NRI
clients, very often, waited for us to share information with them. Or, they
hoped to get updated from their friends/relatives in India on changes that were
announced in India and those that could impact them.
The changing tide
of news flow
As
we moved into a more VUCA (Volatile, Uncertain, Complex and Ambiguous) world
over the last few years, businesses found it challenging to take long-term
decisions. With social media starting to take over as a primary means of
communication, we are also now inundated with significant announcements that
could change the world and local economies with just 140 or 280
characters.
Modifying portfolio allocation
Just as it is critical to analyze
why a certain announcement is being made, it is also important to understand
the longer-term impact on the investment portfolio. Avoid getting carried away
by the noise and the negative news flow around, and stay focused on financial
goals.
Investors may also wish to look
carefully at the expenses of their portfolios during times of a slowdown, to
help keep their portfolio returns intact. A combination of active and passive
mutual funds, for example, can work well to keep a good balance of returns and
expenses.
Avoid hyperactivity on your
portfolio in a hyperactive world, and stay focused on the changes in your
financial goals, if any.
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* Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance