Loved the advise from the friendly bear 
âŚAgree its not sustainable⌠have moved 33% in cash and plan to 60% by Next FridayâŚIts a game of musical chairs now.
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This statement is qualified with âusuallyâ, which captures the premise precisely.
During hyper-inflation in Germany in 1923, people who held onto cash and cash eqivalent get wipeout in an year.
Look at venezuela now; same thing is happening.
âWill it happen in USA?; and how would it affect rest of the market
including India?â is the million dollar question.
âExpect the unexpectedâ; and prepare for such scenarios.
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I will add one more idea for you Chirag 
Letâs say a portfolio value is Rs. 100
Letâs say one invests only 30 Rs. Balance 70 is cash at 6 percent.
Now if this is your highest conviction and you have studied it as well as is possible and this looks like a 100% upside in a year but you are thinking of a overheated market.
The wise thing to do might be to invest only this 30 and wait for it to become letâs say 60.
You will get:
30 Rs Profit
4.2 Rs Interest
Total 34.2 Rs
Thatâs 34 percent CAGR. Even half of that is a wonderful gift for conviction anyways, and also the reason why we cannot time the market and get out 100% but play par for the course as presented.
With protection of a cash backup if opportunities present.
Thatâs one way of portfolio construction.
Maybe it might give some idea else do feel free to discard.
I will also add, I did take an extreme example in hindsight to explain a known black swan so I will apologize as I was a bit callous in my choice of words. Sorry for that.
Hereâs the Black SwanâŚerrrâŚBlack Duck. This thread reminded me of the âwabbit season, duck seasonâ argument 
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Haha. Classic bull bear scene just like what he have going on on this page 
Investment is a roller coaster and there are always going to be pockets of value. Idea is to have margin of safety.Always be optimistically cautious. Happy investing.
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A black swan event (heart attack) and the market wonât be there.
Are you suggesting literally as you have written? If so, pls elaborate.
All the lakhs of crores just vanished⌠is that a possibility that should be factored in while considering any financial decision⌠equity, debt, FDs, gov bonds all will vanishâŚ
HiâŚ
Are arbitrage funds a reliable way to park money⌠they have a one year tax-free rule.
I have no personal experience with arbitrage funds but I donât like the sound of the word arbitrage fund. I personally wouldnât do anything complex.
There was a time when arbitrage funds used to give 8% post tax returns (when held over 1 year) but in the last few years the returns have fallen in the range of 6% to 6.5%.
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Has any one here checking debt bond market alan Greenspan is suggesting there is a bubble in debt market not equity
I did the same (moving to Ultra short term bond funds) around 2 years ago. So far I think it has worked out well. Advantage : No tax till you sell , approx 1.5% extra returns compared to FD (with some volatility in returns in very short term as the downside). Even if the returns come down in the next few years in line with interest rates, taxation advantage would still remain.
Liquid funds would mean less volatility in returns, but obviously would bring down returns by at least 1%.
So, I would say anything which you are likely to need in next 6 months, you may park in liquid funds. Others you can invest in Ultrashort term bond funds.
All,
NIFTY PE is now at high levels (close to 24), so what is the thinking one should have as value investor? I have seen various funds (specifically dynamic funds) raising cash + debt levels to 20% and above. Few large investors have cash components up to 22-24% now.
Though this will vary from risk appetite of individual investor, what precautions should we take when markets are running ahead of fundamentals? Any thoughts.
1 year back, I had invested my Dadâs money in below Debt funds. Annualized XIRR is around 12%
First one has given 15%. Just giving the funds for giving you an idea of type of returns and further study.
ICICI Long Term Plan- Direct Growth
Birla BSL Dynamic Bond Fund-Growth-DIRECT
DSP Strategic Bond Fund - Dir - G
Note: This is not a buy or sell recommendation.
@SS64. long term/dynamic bond funds are very volatile. moreover one has to monitor the interest rate cycle. currently it seemed to have bottomed out. thats why these did phenomenally well over the last few years. i already have some exposure to some of these funds. contemplating exiting them.
Thanks @gautham1. My understanding is in Dynamic Bond funds, Fund Manager takes care of Interest rate Cycle. I agree with volatility as I have seen huge ups and downs in short time. I have another 2 years to go to get full income tax benefit. So, will watch more carefully.
Although my statement is meant to a hyperbole, it is a possibility for a short term.
There are a few mini crashes(sudden drop of 3 to 4% in mins) in various markets in the last six months. In many of such instances, the market disappeared (No buyers) for a while.
Have not went into depth to analyse the events in details. But, this could be beacuse of algo trades.
Markets run on sentiments; if sentiments are shaken deeply, market
will disappear.
No two bull or bear markets are caused by same reason; each time
it is different. Center bankers think that they can control sentiments
and thus market. Current period is going to be a case study and
research for the next generation economists.
i ve done a nifty 500 accumulation distribution charts from 2000 onwards
Market Sentiment Indicator: Retail is still positive and buying the dips thinking itâs a correction and sale is already on
It means that there might be a small rally but retail will finally turn negative and cash out of their MFâs etc. We must wait for retail to turn really negative and for Nifty PE to come to buying levels. Not yet the time to enter.
could be true. But hearing from almost everyone that lot of money is on the sidelines, big correction (additional 10-15 plus percent) from here seems difficult. However, would love to be wrong in this case.
BTW @sandeeprawat thanks for sharing the chrome extension tool!
DISC- have bought very little in this fall. waiting for some more correction