How To Navigate A Market At All-Time Highs

Every day brings media reports of India’s economy losing steam, auto sales falling, industrial output being low and so on. At the same time, stock markets are at their peak. What should you do? Should you invest more, hold or sell? In our view, you should do what every successful investor does – have a long-term view on your investments. Current trends are transitory; however, history has repeatedly shown us that stock markets move one way over the long term – up.

There are numerous investors who stay on the sidelines when markets are at an all-time high with the belief that it’s too late to invest at this stage. Similarly, there are investors who do the same when markets are at their lowest with the belief that there could be a further fall due to pessimism. Both categories of investors miss out on attractive investment opportunities as a result of giving too much importance to current trends.

In investing, what matters is spotting an attractive stock of a company with a unique and superior product/service that is in a growing industry-group, is a leader in its sector with high earnings growth, profit margins and return on equity, has dynamic stock-price action, and is run by smart and honest management. The next step is to invest and… stay invested for the long term. Naturally, you need to monitor your investment to spot any downtrends that may have a fundamentally negative impact on your investment in order to exit early before the market recognizes this.

We strongly believe that investing is not about high returns over short time periods or trying to time your investments and exits. It’s about realizing the long-term value creation of quality companies.

The timeless popular saying, success in investing is the result of ‘time in the market’, not ‘timing the market’ still holds true.