A new year brings new hope, new optimism, and new aspirations. But for your investment strategy to be even a little more successful, it’s imperative that you avoid some of the most common investment mistakes investors make in 2023. Here are the top five mistakes to avoid in 2023: is.
Don’t be fooled by the big bang theory
2023 will be a tough year for companies and stocks touting vague future aspirations. Artificial intelligence, machine learning, IOT, EVs, green hydrogen are all great and certainly have immense potential. But the stock market in 2023 will pose even tougher questions. Where does cash flow come from? What is Cash Burn? What quarter is your operating profit? So 2023 won’t be the year of the Big Bang Story. It will be more about earthly reality.
ignore the power of ties
In the last 15 years since the financial crisis, there has been a big trend towards equities. In a way, it was the TINA factor. Most bonds have negative real returns. 2023 could be the year debt resurfaces as a strong portfolio candidate. Interest rates are skyrocketing and inflation is falling. Issuers are in much better shape in terms of low leverage and solvency. And if yields are finally trending downwards, rising capital will be the icing on the cake.
keep investment spending constant
Investors have probably made this mistake for too long. Most SIPs and other investment calculators typically suggest a certain level of savings and investments each year. If your income level goes up and your investment stays the same, you are wasting your investment potential. 2023 marks the culmination of India’s long-term growth. It’s time to seriously consider increasing your investment spending over time, at least in a way that matches your potential.
mistaking diversity for diversification
Why are we making this point specifically? 2023 could be the year of strange correlations. The question is not just today’s correlations, but whether these correlations will persist. Diversity is about increasing stock. It worked for a long time. Now is the time to focus on targeted diversification. Combining uncorrelated assets is not enough. Continuous monitoring of this correlation is also essential. In 2023, simply adding more equity or diversifying across more assets will not be enough.
Ignore asset allocation
There is a saying in the market that the more things change, the more they stay the same. And while the market looks complicated, the core remains simple. 2023 will continue to be driven by asset allocation. Alpha is not driven by stock selection, churn, or timing. It comes from asset allocation. You just ignore this at your own peril.
2023 is a time not only to choose, but to be aggressive. The moral of the story is not to ignore asset allocation.
(Garg is chief of business at blinkX, JM Financial)
(Disclaimer: The recommendations contained in this article are made by external parties. The views expressed herein are those of their respective entities and those of Business Today (BT). BT further recommends that you consult your financial advisor and seek independent advice regarding any of the matters described herein, including equity investments, mutual funds and general market risks. .
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