By Srishti Dixit, Group Founder and Managing Director, ONS FINSERV
A recent panel discussion on investing in the Indian and U.S. stock markets underscored enduring principles for wealth building. Experts emphasised the critical need to remain steadfast, diversify intelligently, and prioritise intrinsic value when navigating these dynamic global landscapes.
Don’t panic. Stay invested for the long term
The foundational takeaway was the imperative to not panic and stay invested for the long term. Short-term market fluctuations are inevitable, driven by economic shifts, geopolitical events, and unforeseen crises. However, history demonstrates the market’s propensity for recovery and long-term growth. Attempting to time these cycles is often futile. Sustainable wealth accrues through consistent market participation and the compounding effect over extended periods. In the current economic climate, a strong research-backed investment approach is crucial, moving beyond reliance on anecdotal advice. Even amidst volatility, focusing on sectors with strong future potential, such as energy, AI, and Fintech, and aligning investments with the present government’s vision in different countries, can be prudent.
Diversify across Indian and U.S. markets
Complementing this patient approach is the strategic imperative to diversify across both Indian and U.S. markets. In an increasingly interconnected global economy, limiting exposure to a single market amplifies localised risks. The distinct characteristics and growth trajectories of the Indian and U.S. economies offer opportunities to mitigate country-specific vulnerabilities and capitalise on varied economic cycles. Furthermore, diversification within each market, encompassing diverse sectors and company sizes, is crucial for managing portfolio volatility and enhancing risk-adjusted returns.
Focus on strong companies with good fundamentals
Beyond geographical allocation, the panel stressed the significance of focusing on strong companies with good fundamentals. This value-driven approach necessitates identifying businesses with robust financial health, a clear competitive advantage, capable management, and a history of profitability. Such enterprises are better positioned to weather economic headwinds and deliver consistent long-term growth. Diligent research and a thorough understanding of underlying business models are essential for making informed investment choices.
Use market dips as opportunities to buy quality stocks
Conversely, the panel encouraged investors to use market dips as opportunities to buy quality stocks. Instead of succumbing to fear during market corrections, these periods can present advantageous buying opportunities for fundamentally sound companies experiencing temporary price declines due to the broader market sentiment. This contrarian strategy demands discipline and a conviction in the long-term value of selected investments.
Think long-term: Navigate volatility with gradual investing for sustained growth
Ultimately, the central message was to think long-term—volatility is temporary, growth is not. Equity markets inherently experience cycles of expansion and contraction. Short-term volatility is an inherent aspect of pursuing long-term wealth creation. Acknowledging the behavioural biases that can derail investment strategies, the panel advocated for investing gradually—and avoiding any attempt to time the market.
Consistently deploying capital through methods like dollar-cost averaging reduces the risk of investing a substantial sum at inflated prices. By investing fixed amounts regularly, investors acquire more shares when prices are lower and fewer when higher, thus averaging the purchase cost and dampening the impact of market volatility.
Looking ahead 5–10 years, significant growth is anticipated in sectors like AI-related stocks, green energy, pharmaceuticals focused on advanced diseases, and defense. Investors can position themselves to benefit from these trends through careful research and selection of companies within these promising areas. Furthermore, it’s crucial to recognise that the stock market should not be viewed as a shortcut to quick gains, but rather as a disciplined, long-term approach to building wealth.
Treating it as a game of chance can lead to unpredictable and unsustainable outcomes. Instead, relying on sound financial advice, building portfolios grounded in fundamentals, and staying committed to the long game are paramount for long-term success.
The insights shared during the panel offer a timeless framework for navigating the intricacies of global investing. Embracing patience, diversifying strategically, prioritising quality, viewing market downturns with a long-term perspective, and investing consistently, enables investors to construct resilient portfolios and progress toward their financial objectives, irrespective of short-term market conditions. The core principle remains that investing is a marathon, not a sprint, and a disciplined, long-term strategy provides the most reliable path to success in both the Indian and U.S. stock markets.
