A diversified portfolio which is resilient in times of global shocks and uncertainties is Samir Arora’s recommendation, as worries mount over the fallout of an escalation in the Israel-Iran conflict.
The Helios Capital founder was trying to make a point that it was not possible to gauge the impact of every event on the securities market and it was better to build a portfolio that could weather difficult situations.
"We did a thorough study of the evolving Iran and Israel situation and its impact on global markets and Indian markets and our stocks in particular. Looking at upcoming elections and how many seats BJP/NDA can win and following that the budget and separately looking at how China is doing and investors frustration with their returns from China plus the inflation in the USA and whether interest rate cuts will come later this year or next year, we have come to the conclusion that: No one knows anything about anything, beyond a point," he wrote on the X platform in his usual light-hearted tone on April 16.
Also read: Israel, Iran trade punches – What it means for Indian markets
"So focus on owning a diversified portfolio of stocks that cannot be eliminated on any 'bad' factor."
Many X users wondered why people should pay fund managers if they didn't "know anything" about how the markets will behave in adverse circumstances.
Arora said there was a huge difference between that and what he posted. He didn't say that fund managers don't know anything but beyond a point they don’t, emphasizing "beyond a point".
"Anything beyond a point" is different from "anything". In simpler terms- to explain to you- "not knowing everything" is different from "not knowing anything"," he said in response to a comment on his post.
The "trick is to be diversified for there will always be unforeseen events", he wrote.
Also read: Helios Capital's Samir Arora says focus on Union Budget; unlikely money moving from India to China
In an earlier conversation with CNBC-TV18, Arora spoke about how diversification was seen as a bad strategy but it was concentration that was bad.
"So my theory is that you should have 30-40 names. Concentration is a bad thing. Diversification became a negative word for many reasons. Diversification is not a defensive strategy," he said.
On April 16, Isarel’s military chief of staff Herzi Halevi said Iran's attack would be met with a response, without sharing the details but fuelling worries of a wider regional conflict. Iran launched drones and missiles at Israel after its senior military commanders were killed in Syria in an Israeli air strike.
The Indian market ended lower for the third day as investors were spooked by the situation in West Asia and its implications for the global economy.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
