Investors can avoid attempting to time the markets along with predicting the extent of its fall or gain. One way to ride over the macro environment turmoil is hedging oneself and using the right asset allocation strategy.
It may not be incorrect to say that an investor's asset allocation is as important as his/her food diet. While we all understand the significance of a balanced food diet, rarely do we follow it. "Building health" often takes a backseat in the midst of daily hustles and bustles of life. We often forget that time is limited, be it for building good health or wealth. Hence, it is paramount to make use of this time to its best potential.
In today's fickle environment, any "financial expert" claiming to predict the direction of financial markets, is trying to make a lucky guess. Hence, for an investors' self-interest, it is advisable to avoid attempting to time the markets along with predicting the extent of its fall/gain. One way to ride over the macro environment turmoil is hedging oneself, using the right asset allocation strategy.
Decoding asset allocation
Asset allocation refers to allocation of money to multiple asset classes like equity, debt, real estate, cryptos, gold, cash, currencies, etc. The need for asset allocation can't be stressed enough in today's environment, when the only constant is change. All macro environment factors are affecting each asset class differently and in varied degrees. For example: a recessionary environment along with higher interest rates is likely to boost the prices of India's favorite yellow metal, gold. Likewise, a rally in prices of crude oil can significantly deplete corporate earnings and hence lower stock prices.