How I am managing my own money through this crisis

Tough times don’t last, Tough people do

How I am managing my own money through this crisis

One March 22, I read a very insightful article on How Ben Carlson, a US based Wealth Advisor, has been managing his money though the crisis and I found it quite relevant. This inspired me to share my own experience of going through this crisis or rather once in a lifetime opportunity if I may believe.

Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have or don’t have in their portfolio.

- Nassim Nicholas Taleb from the book “Skin in the Game”

I have shared my personal portfolio in each of my meetings with you as I have always believed “Practice What you preach”. In these trying times, it is all the more important that I should share with you how I am navigating through this market turmoil in black & white data (numbers don’t lie)

Highest portfolio Value as on Jan 21, 2018

My family’s portfolio value touched the highest CAGR Return of 23.20% (8 year compounded returns) as on Jan 21, 2018

Investment Value: Rs 4,18,80,584
Value on Jan 21, 2018: Rs 6,11,14,351
Profit: + Rs 1,92,33,767
8 year CAGR: 23.20%

Lowest portfolio Value as on Mar 24, 2020

As I write today on March 24, 2020 my family’s portfolio value is -7.08% (10 year compounded returns) after yesterday’s carnage of 13.1% steep fall.

Investment Value: Rs 6,75,00,523
Value on Mar 24, 2020: Rs 5,76,79,125
Loss: – Rs 98,21,398
10 year CAGR: -7.08%

The most important thing is what I have done over the last 2 years (From Jan 21, 2018 to March 23, 2020).

Net Addition in Equity Funds: Rs 2,92,77,032
Present SIP p.m : Rs 9 lakhs (started with Rs 10,000 SIP in Aug 2010 and growing every year)
Net Loss in Equity Funds over last 2 years: – Rs 2,47,49,595 (a whopping loss)
Overall CAGR loss in last 2 years: -21.25%

Equity has a funny rule: If you can’t handle me at my worst, you don’t deserve me at my best

I believe what I have done in last 2 years requires huge amount of guts (Ramesh Damani says if you are fully convinced, then back it up with truckload). All the more in last 23 days I have invested Rs 66 lakhs of my family’s money in equity funds at various levels (I can never find the exact bottom hence I spread out my investments at each fall). This is once in a decade opportunity and I certainly don’t want to miss it. I have Rs10-15 more lakhs remaining which I will invest in next 10-20% fall. Thereafter I will run out of funds and will simply SIT TIGHT.

Many of you have also switched in lot of money from your liquid funds to equity funds or have done top-ups (thanks to your belief in our advice, we have done more than 2000 buy / switch transactions over the last 20 days)

Though I personally believe this is the best time to add more money as can be seen from the below valuation chart (Source: ICICI Pru MF), if you don’t have any further money to invest – its quite ok.

Do I have to worry about the loss of close to Rs 2.5 crs? Why should I worry when this is purely for long term and I don’t need the money now. Just like in 2018 it was paper profit, right now it is paper loss unless I cover it into a real loss by pulling it out. Even legendary investor like Raamdeo Agarwal, Chariman of Motilal Oswal has see more than 50-70% erosion on 3 occasion and see where his wealth is today. He wealth is again down by 25% but he is as calm as ever.

Since yesterday, I believe few of you have started panicking (fear is more contagious than a virus) and want to move out precisely at the wrong time when you have already taken 30-40% hit on the portfolio. “Remember, when you sell in desperation, you always sell cheap” – Peter Lynch

Few of you are also thinking that I can cash out at 27,000 Sensex levels and re-enter when it is 20,000 levels (making a cool +25% return in the process). I believe this is easier said than done. It is very difficult to time the market precisely. “As Howard Marks believe, When the knife stops falling, when there is absolute clarity on the horizon, when the dust settles you can be rest assured there won’t be any bargain left.”

Hence to my mind (from the last 16 years of experience), the best advice at this time is from the below Fevicol Ad – Pakde Rahna, Chodna Nahi

Finally, if you are still not convinced and the market is giving you sleepless nights more than the corona virus scare then pls pull out all money and put it in SB a/c. For me your peaceful night of sleep is more important than the return on your investment. Pls feel free to call me / message me and I / my team will do the needful.

Stay Safe, Stay Invested.

Wealthfully Yours
Gajendra