My view for 2024
2023 was a surprise year . In line with my view that market is overvalued esp in context of higher interest rate , I kept shifting my asset allocation from equity ( 90% to 80%) to debt …
But Crazy market movement meant I had sell lot more equity than I had planned in absolute term . Overall PF return was 50%+ inspite of huge shift to debt and movement from midcap to large cap. That indicates level of craziness that markets is in .
Last 4 year CAGR of 40% even on my conservative PF which is high on large caps / passive ETF and debt scares me esp when geopolitics risk are high and interest rate are higher in decade . Global liquidity index and domestic investor SIP is driving market valuation beyond my comprehension .
So what happened …
Oil / Gas Magic
Contrary to expectation of OPEC inspite of oil production cuts … Oil prices reduced … America increase in oil production that compensated Saudi reduction was big surprise of 2023…
Add to that … now on LNG
Low energy prices meant lot of Risk related to Indian market reduced and also gave flip to equity earnings .
US and India GDP Gr continue to surpass expectation
US at 5% and India at 7% are excellent Gr nos and will increase overall optimism esp to invest in capacity expansion .
Global Liquidity continues to grow
Against view of FED balance sheet tightening has been countered by US and other Government fiscal loosening esp inn areas of infra spends and war has lead to global liquidity remain favourable .
So what is my action plan 2024 …
I think we have pulled in lot of future returns and GOVT investment spending will reduce as we come closer to near and post election
So I have decided to
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Reduce asset allocation of equity to 70% in case market continues to rally like it has done in 2023 and increased allocation to long term debt or arbitrage funds
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If market remains stagnant and declines not more than 10% . No change in asset allocation
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If market declines > 20% < 40% increase equity allocation to 85%
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If market declines > 40% increase equity allocation to 90%