A Brief summary of the Micro/Small/Midcap Carnage

The urge depends upon your equity allocation vis a vis your networth . If the equity allocation is small and your monthly cashflows are not dependent upon equity returns … One should not sell unless he feel he has made terrible mistake in analysing the company …

However if equity allocation to your networth is high + you are dependent upon returns on equity for monthly cashflows things become different …

With this base I will explain my case … In 2008 - my equity allocation vis a vis networth was low . I was in primarily in fixed income … so I used 2008/2009 to build equity portfolio and I could hold my urge to sell as losses in absolute terms were less ( though % wise it looked big )

In 2013 - My allocation had increased but still i was luckly I had stocks which did not fall much so I sold FMCG stocks and bought mid caps which were very cheap … I had detailed in BULL in BEAR Market thread .

But now my equity allocation in 2018 was high 70% but my dividend income more than takes care of my annual expenses . So I used interest income to invest in beaten down stocks plus small rotation across stocks ( on relative valuation ) + reducing fixed income allocation ( planned to be reduced to 20% from current 27% ) .

Plan of shifting from Fixed income to equity at daily level of X / 180 days … 180 is approx no of days from Sept to May 2019 and X is total amount of cash to be shifted from fixed income to equity

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