Forbes India 15th Anniversary Special

Investing in good times

At a time when markets are high it makes sense to be careful now than regret later

Published: Jan 27, 2015 06:00:00 AM IST
Updated: Jan 27, 2015 08:36:08 AM IST

Master investor Nemish Shah, co-founder and, currently, director of Enam Holdings, is a man of few words. So when he says this is among the best markets situations that he has seen in his investing career, it is a measured assessment of sentiment. And that, in turn, is rooted in facts. Oil prices are down to $45 a barrel: This, he says, will reduce the import bill, thus positively impacting India’s current account deficit. Bond yields are already factoring in interest rate cuts and, over the last year, the equity market is up by 30 percent. For the sceptics, the message seems to be: Underestimating India’s growth potential is incorrect when the global economy and the domestic market indicate buoyancy. Shah’s optimism, however, is balanced by the caution displayed by the various fund managers we interviewed.

The smart investor is always prepared.

Take S Naren, chief investment officer at ICICI Prudential Mutual Fund, who even uses a checklist to guide his team through extreme times. These could be bull or bear markets. Counter-intuitively, one of his rules is to be more careful—or take less risks—in a bull market scenario. We have him in conversation with Atul Gawande, the prominent US-based surgeon who has written the book, The Checklist Manifesto, discussing the idea of creating a checklist for industries that deal with complexities on a regular basis.

Meanwhile, Prashant Jain, one of the biggest investment managers in the country, has a different challenge—that of the bigger numbers. His HDFC Top 200 Fund, with around Rs 14,000 crore AUM, has managed to clock record returns after a period of flat growth. Jain is not intimidated by ticket sizes and has faith in Indian equities as an asset class that will produce the best long term returns. Take equity seriously, he tells investors, when considering asset allocation.

That, perhaps, has been the common theme for this special package, as the advice and analyses that follow will show you.

To quote pioneering investor Sir John Templeton (of Templeton Mutual Funds) from Tony Robbins’s Money; Master The Game: 7 Simple Steps To Financial Freedom, the seminal book on personal finance: “Bear markets start on the time of pessimism. They rise on the time of scepticism. They mature on the time of optimism and they end on the time of euphoria!”

It is safe to say, we are just stepping away from scepticism, but we are still far away from euphoria.

(This story appears in the 06 February, 2015 issue of Forbes India. To visit our Archives, click here.)