Prakash Kumar

If an investment consultant is selling you a V shaped recovery in equity market and asking you to bring in more funds, please note that market has already done half of this V shaped recovery by end of April & further gains might already be limited.

Full recovery from here on is laden with lot of iffs and buts. It depends how the pandemic responds once economy start opening up and lock down restriction eases.

A relapse will be detrimental and it will send shock waves across the planet. A partial recovery is best you can bet during May where you should not expect surreal gains.

As Trump will continue to lose ground to Biden, expect fireworks on issues related to domestic and foreign policy which will likely spook the market from time to time.

Month of May will also define whether containment of disease in large parts in high density region like India is for real. You should pray it stays so – because in the event it doesn’t it can get pretty ugly – pretty fast.

At some stage this artificial liquidity pumped into market by FED will dry up and then the reality of 30 million and counting job losses in US will sink in and start to show its ugly face.

A nightmare which awaits is also related to travel logistics. Many people are held up at a location which is not their home – they will rush back at the first available opportunity. This comes with health warning as this will challenge the existing crippled infrastructure and available manpower. It also remains to be seen what sort of social distancing will stay enforced once the worst is behind us ……….

In summary, lot is yet to be decided and as we enter May it can very well decide the water shed moment towards arresting the slide. If May is good then we will likely be better in future months but if May succumbs just like its March and April peers then all bets are off for rest of the year.

Many Countries including US claims that spread of the disease shows that they have crossed the peak point and curve is showing symptoms of flattening. For the sake of humanity you must pray that it stays that way because if by any chance the curve lifts its venomous head even by a bit – we are talking about a meltdown of tsunami proportions.

All thing considered you are better off sitting on the fences with whatever cash you can have for possible rainy days ahead. There will be investment opportunity in future subject you fight out current impasse.

Agree this would potentially mean leaving money on the table – but investment right now is risk laden where solely from a risk management perspective you are potentially looking at a high probability – high impact quadrant -4 scenario play out.

A basic understanding should tell you how we deal with Quadrant-4 situations. Its treading with utmost caution. Stay away from situations which make you look like – fools rush in where angels fear to tread.