You may observe we are gradually slicing out of our Specialty Chemical positions to re-allocate elsewhere.
A key choice we need to make is whether to trim on valuation excesses or to let positions compound and accept incremental underperformance due to valuation de rating.
Essentially, what game are we playing?
Read MoreThe most frequent question we get from partners is what do you think will happen to the market.
Bitter truth: it is the wrong question to ask because no one knows.
Why is this so? Because markets move due to multiple variables, not all of which are visible or predictable.
Read MoreIn trying to optimize short term performance and also long term performance simultaneously is a very hard game to play. We can choose to be smart in the short term or in the long term – but can’t choose both. It’s a rare genius that can trade short term and invest long simultaneously. Most people who claim they can do this lie about their returns.
Read MoreFranklin Templeton Mutual Fund, on Thursday announced it would wind up six credit funds with a large exposure to higher-yielding, lower-rated credit securities.
Why did they do so? The Corporate Bond markets in India are fairly illiquid. FT schemes have got impacted because they invested in papers with low credit rating (they actively took on credit risk).
Read MoreAs a follow up on the 2 scenarios we shared earlier on 18 March, the scenario likely to play out is perhaps something between Scenario 1 and Scenario 2 that we envisaged. No one knows, “for sure”, the road map to normalization. We are likely to see 2 steps forward and 1 step back approach based on “trial and error”.
Read MoreA salute to our doctors, nurses, police forces and sanitation workers who are at the forefront of this battle. A salute also to the Indian state – we are always criticized by the West, but we show our best when our backs our against the wall. And we have done a far better job than the developed world so far.
I am writing to share a few thoughts
1. Be careful how you interpret the news you are reading
Read MoreWe have witnessed a black swan event. We need to wait out the storm. We will not panic and sell unless we believe the fundamental 3-5 year prospects of a company have been significantly challenged. Selling now – just because there is short term uncertainty – will crystallize a temporary loss and make it permanent.
Read MoreIt has been a really tough month for all of us. Portfolios will be down about ~25-30% in a month. This is a speed of decline which I have never encountered as a Fund Manager.
Solidarity believes that following a disciplined process will result in good outcomes over the medium term, even if we get the occasional bad break that we are experiencing at present.
Read MoreMarkets have been on a continuous sell-off mode since then. A draw down of 20% from peak in a year is not an uncommon occurrence. However, we have all been surprised because we have not experienced it for a while. And, unlike other corrections, we have all been surprised at the speed of the decline as it has come in less than 3 weeks.
Read MoreThe Corona Virus has given the markets a scare with the benchmark indices ending ~7% lower last week. The large number of cases in Italy has understandably made participants nervous whether this is another normal correction or the start of something deeper and bigger.
I am writing to share with you our perspectives.
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