[Mubeen]

Originally Posted by adithya.kp

Does anybody use https://international.schwab.com/pub...l/us_investing ?
Looks interesting. 4.95$ per transaction is not bad. I want to know if there are any other hidden charges. Please let me know if anyone has feedback on them.

4.95 USD is highway robbery. Try Interactive brokers. Brokerage is minimum USD 1 per trade and a capped at a max of .50% of trade value.

Minimum account funding is 3000 USD. Minimum monthly charges are 10 USD for this account and is waived off if your brokerage billing equals or exceeds that amount.

[adithya.kp]

I agree its high. But is it that bad?. Lets say you do a transaction of Rupees 1 lakh. The effective brokerage will be 0.34% which is not bad if one is not day/short term trader. ( In fact it will much less if the transaction value is higher). Moreover Schwab is a very reputed broker. You get peace of mind.

Originally Posted by Mubeen

4.95 USD is highway robbery. Try Interactive brokers. Brokerage is minimum USD 1 per trade and a capped at a max of .50% of trade value.

Minimum account funding is 3000 USD. Minimum monthly charges are 10 USD for this account and is waived off if your brokerage billing equals or exceeds that amount.

[Mubeen]

Originally Posted by adithya.kp

I agree its high. But is it that bad?. Lets say you do a transaction of Rupees 1 lakh. The effective brokerage will be 0.34% which is not bad if one is not day/short term trader. ( In fact it will much less if the transaction value is higher). Moreover Schwab is a very reputed broker. You get peace of mind.

Fair enough. If you're a long term investor with very few transactions, it shouldn't be a material difference.

As far as reputation goes, Interactive Brokers is one of the largest in the U.S. Also if I'm not wrong Schwab has a minimum 25000 USD funding requirement as against 3000 USD for Interactive brokers.

Whatever be your choice - good luck with your trading activity.

[adimicra]

Guys, what's the advice on stock markets now? I am already in significant losses as I was mostly investing in midcap but looks there is no stopping the bloodbath. The new finance minister seems extremely socialistic and the mantra seems to be taxing the rich and profitable to the extent possible. I know it is not wise to time the market and things play out in the long term but if this kind of leadership is there for the next 5 years, I don't see any decent returns. Shall I book losses and get out of the market?
Please note that I have been investing for a long time and have seen huge market falls and lower circuits. So, It's not that I am panic selling. The problem is I have lost any confidence in the current leadership. Another advice is to wait for 6 months or so till the next budget. Comments?

[SmartCat]

Originally Posted by adimicra

Guys, what's the advice on stock markets now? I am already in significant losses as I was mostly investing in midcap but looks there is no stopping the bloodbath. I know it is not wise to time the market and things play out in the long term but if this kind of leadership is there for the next 5 years, I don't see any decent returns. Shall I book losses and get out of the market? Please note that I have been investing for a long time and have seen huge market falls and lower circuits. So, It's not that I am panic selling. Another advice is to wait for 6 months or so till the next budget. Comments?

Almost all half-decent smallcaps and midcaps will eventually hit all time highs. That is, as long as they do not have too much debt. Money that is rushing out of mid and smallcaps will eventually rush back in. It is the "circle of stock market life" . If past is any indication, it takes 3 to 5 years for stocks in small/midcaps to come out of a bear market. If we assume that small/midcap bear market started in early 2018, we have another couple of years of disinterest from investors.

If fall in prices is bothering you, just don't login to your brokerage account. Check back after a few years. If you bought a 40 x 60 sq ft piece of land near Hyderabad ORR, do you go to local real estate broker everyday and ask what is the selling price? Or do you come back after 5 years and then see what price you can sell your investment for? Remember that stocks are not just random numbers that go up and down. They are assets/ investments - just like real estate. You have to treat it as such.

[sunilch]

Originally Posted by adimicra

Guys, what's the advice on stock markets now? I am already in significant losses as I was mostly investing in midcap but looks there is no stopping the bloodbath. The new finance minister seems extremely socialistic and the mantra seems to be taxing the rich and profitable to the extent possible. I know it is not wise to time the market and things play out in the long term but if this kind of leadership is there for the next 5 years, I don't see any decent returns. Shall I book losses and get out of the market?
Please note that I have been investing for a long time and have seen huge market falls and lower circuits. So, It's not that I am panic selling. The problem is I have lost any confidence in the current leadership. Another advice is to wait for 6 months or so till the next budget. Comments?

5 years is a too long time period to time the market. It is said that you can't time the market but perhaps at some special occasions you indeed can. If there are some stocks in your portfolio that you know are not going to do good in near future (cyclical change, political scenario change, market dynamics change - e.g. interest rate cycle, etc) you can sell those now and buy them at a later date. That later date can vary from a few days to a couple of years. Otherwise the advice is to stay put, add a few of your favorite stocks in small doses and sit back.

[adimicra]

Thanks for your replies.
I am not a new investor who is witnessing downturn for the first time. I invested through the 2008 financial crisis. However, I don't believe in invest and forget philosophy. You need to have a belief to stay invested for the long term, belief that things will turn around. However, I am terribly disappointed about how the new finance minister and government is taking an ultra-leftist view of the economy. Have you ever heard any finance minister say that he/she does not care about the stock markets? Apart from the additional tax on FPIs, now CSR is being also forced upon companies with a penal clause. With this kind of attitude, how people will have the confidence to invest in the country? How the economy will turn around? How will you make money in the markets?
As I said, I hope in the next few weeks or months, some of the economic indicators will force the government to rethink its policies and attitude which can trigger a turnaround. If that does not happen, then I think the markets are doomed for a long long time. It will really test the long-term investment strategy.

[SmartCat]

Originally Posted by adimicra

I am not a new investor who is witnessing downturn for the first time. I invested through the 2008 financial crisis.

A few points:

- This downturn in smallcaps started in 2018, not 2019. Primarily because of IL&FS collapse, its domino effect on NBFCs and hence discretionary consumption sectors like automobiles.

- FPIs don't own any of the smallcaps that are falling everyday. They are mostly invested in Top 100 companies by marketcap. And Nifty is just 10% off all time highs. If smallcaps are falling the way they are, it means HNI investors are selling.

- So for things to turn around, the health of either NBFC or PSU Bank sector needs to improve. What you need to do is watch the actions of Govt in propping either of the two sectors.

- Your idea of exiting the markets and getting back in is fine. After all, that's what many experienced investors do. It's a fine strategy as long as you have a proper plan in place. Remember that smallcap index can fall 10% from here, go up 15%, fall another 20%, go up 8%, fall 25% and so on. When smallcaps are on the uptrend, it will be accompanied by some random 'good news'. So your current plan of getting into the markets based on Govt talk/actions is not the right way.

- You could look at some technical indicators for re-entry. Eg: if smallcap index crosses 200 day moving average, and stays above the line for atleast 1 to 3 months. Basically, if you intend to time the markets, you need to come up with a proper plan. Study the downturn between 2008 and 2013 for smallcaps by looking at the charts, rise and fall of trading volumes, news flow and valuations of smallcap stocks during that period.

[carboy]

Originally Posted by adimicra

The new finance minister seems extremely socialistic

Just like the old finance minister.

[adimicra]

Originally Posted by SmartCat

A few points:

- This downturn in smallcaps started in 2018, not 2019. Primarily because of IL&FS collapse, its domino effect on NBFCs and hence discretionary consumption sectors like automobiles.

- FPIs don't own any of the smallcaps that are falling everyday. They are mostly invested in Top 100 companies by marketcap. And Nifty is just 10% off all time highs. If smallcaps are falling the way they are, it means HNI investors are selling.

- So for things to turn around, the health of either NBFC or PSU Bank sector needs to improve. What you need to do is watch the actions of Govt in propping either of the two sectors.

- Your idea of exiting the markets and getting back in is fine. After all, that's what many experienced investors do. It's a fine strategy as long as you have a proper plan in place. Remember that smallcap index can fall 10% from here, go up 15%, fall another 20%, go up 8%, fall 25% and so on. When smallcaps are on the uptrend, it will be accompanied by some random 'good news'. So your current plan of getting into the markets based on Govt talk/actions is not the right way.

- You could look at some technical indicators for re-entry. Eg: if smallcap index crosses 200 day moving average, and stays above the line for atleast 1 to 3 months. Basically, if you intend to time the markets, you need to come up with a proper plan. Study the downturn between 2008 and 2013 for smallcaps by looking at the charts, rise and fall of trading volumes, news flow and valuations of smallcap stocks during that period.

Thanks, @smartcat.
I have no problems investing through downturn as long as there is hope. I know it's difficult to time the market and I have never been successful much. What I was thinking if it's wise continuing investment in Indian stock markets for the next few years or park money in govt bonds or FDs. My problem is that this govt is going to stay for another 5 years and with such business-unfriendly leftist attitude and policies, can we hope for a recovery in the markets in the next 5 years? Also, HNIs will be impacted significantly due to the super-rich tax.
The NSE midcap and smallcap indices are down 27% and 43% from the lifetime highs in Jan 2018. The 3-year return for these indices are 5.5% and -9.7%. Retail investors investing through SIPs are sitting on huge losses. So, if the sentiment is going to be weak in the future as well, then shall we continue to invest?

[SmartCat]

Originally Posted by adimicra

I have no problems investing through downturn as long as there is hope. I know it's difficult to time the market and I have never been successful much. What I was thinking if it's wise continuing investment in Indian stock markets for the next few years or park money in govt bonds or FDs.

I have mentioned this a couple of times before. The right way to invest is always keep a certain percentage of assets in fixed income. For simplicity, choose 50:50 and stick to it forever.

- In a bull market, buy fixed income (especially govt bond funds) because equity part of your portfolio shoots up to 55%, 60%, 65% and so on. So pour your savings into fixed income with the aim of bringing your assset allocation to 50:50 ratio.

- In a bear market, buy stocks because the equity portion of your portfolio falls from 60% to 55%, 50%, 45% and so on. Pour your savings into stocks with the aim of bringing your asset allocation to 50:50.

By following the above rules, you can easily 'time the markets'. You will automatically buy low. As an added advantage, government bond funds do well whenever equity is performing poorly. That's because of flight to safety and reduction in interest rates by RBI/Govt (to "kickstart" the economy).

My advice to investors is to ignore the Government/actions and take a rule based approach to investing.

[adimicra]

Okay, thanks for your advice.
Do you suggest start investing in govt bonds now? I don't have any debt allocation at all but planning to put at least 25% in debt.

[SmartCat]

Originally Posted by adimicra

Okay, thanks for your advice.
Do you suggest start investing in govt bonds now? I don't have any debt allocation at all but planning to put at least 25% in debt.

If you have zero debt allocation, then sell off 25% of your equity portfolio and move it to govt bond funds. At the end of each month, see where the equity:debt ratio stands. As mentioned in the previous post, buy the asset (equity or bonds) that falls below the set percentage (75% for equity, 25% for govt bond funds)

Before you jump in, do some google research (keyword: stocks bonds ratio) on this topic. Because bonds move up and down in value everyday, just like stocks. However, your returns are guaranteed by Government of India if you hold for a certain duration. Still, understand what is happening before you invest in government bond funds.

[carboy]

Originally Posted by adimicra

Okay, thanks for your advice.
Do you suggest start investing in govt bonds now? I don't have any debt allocation at all but planning to put at least 25% in debt.

The first debt allocation to be done by anyone should be PPF - max out the 1.5 Lakhs per year first thing each year before going for any other debt instrument in that year. PPF is the only Exempt-Exempt-Exempt Debt Instrument available in India

[Simhi]

Originally Posted by carboy

PPF is the only Exempt-Exempt-Exempt Debt Instrument available in India

What about EPF? I thought EPF is also EEE.