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Russian (RU) Apr 05, 2025, 01:41:17 PM IST
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Profit & Loss – Two Sides of the Same Coin
"In equity markets, profit and loss are two sides of the same coin. You can’t have shiny days throughout your investment journey," says Achin Goel, Vice President at Bonanza in an interview with ETMarkets.
Before making any changes to your portfolio while sitting on a loss, it’s crucial to pause and evaluate the underlying reasons. Acting in haste without proper analysis can be more damaging than the market downturn itself.
TIL Creatives
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Reassess Your Investment Goals
The first question investors must ask themselves is whether their investment goals or financial situation have changed. "Does your investment horizon have shortened? Has your financial situation changed?" Goel asks.
If the answer is yes to either, then it's a clear signal to review and potentially realign your portfolio to match your current needs and timeline.
iStock
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Review the Portfolio’s Core Potential
The next step is to examine whether the stocks in your portfolio still hold the same promise as when you first invested. "Do the stocks you’re holding have the same earning potential before the markets started to rain? If the answer is No, then you need to revalidate your thesis for those particular set of stocks," Goel advises. A weak fundamental outlook is a strong reason to exit or reallocate your investments.
ETMarkets.com
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Check Your Risk Tolerance
Markets test more than just strategies—they test your temperament. "Volatile markets test your risk tolerance. Are you comfortable with the current volatility in your portfolio?" says Goel. If you're not, it may indicate that your current asset mix isn’t suited for your risk appetite. "One needs to have some belly to testify these volatile times to enjoy good days," he adds. In such cases, reallocating to safer, less volatile assets could be a better fit.
TIL Creatives
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Review Asset Allocation
Proper diversification can be your biggest ally in turbulent markets. "Is your portfolio properly diversified?" Goel prompts. He believes that appropriate asset allocation can cushion the blow during downturns. "You can definitely consider rebalancing your portfolio to bring it back in line with your target asset allocation," he says, reinforcing that your strategy must always match your financial plan, not just the market conditions.
When in Doubt, Ask an Expert
Not everyone has the time or tools to conduct a deep-dive portfolio review. "If you don’t have so much time and resources to do the above exercise, you can definitely consult a financial expert or advisor," Goel suggests.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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