Market Insights: Understanding Corrections, Tariffs, and Investment Strategies

his election period. So obviously all the optimism around Trump's election victory has waned and focus has now

shifted to more broader uncertaintities in the market related to trade policy and growth outlook. And if you look at

this correction again like you know when you when I use the word correction again um something to note uh correction as a

word is used when the stock market drops by more than 10%. So whenever there is a more than 10% drop in the stock market

it is termed as correction territory. If the stock market goes down beyond that uh say to 20% then we are entering into

what is called as a bare market. So we are not yet into a bare market um but we have definitely entered into correction

territory. So Kenny, if you move on to the next slide, it uh shows up that the S&P 500 has dropped more than 10% from

its peak. And this correction is kind of like last seen in 2023 when S&P 500 again dropped by 10.3% from end July to

October. So on top of all of this there is obviously also talks of recession that is resurfacing and once this was

more on the sidelines is coming back to the center in terms of conversations as well. Are we heading into growth

slowdown and resulting in an inflationary environ sorry in a recessionary environment kind of like

going forward. So if you move on to the next section, if we dig deeper, um you can see that actually most of the drop

in equity market is actually led by the US side. So most of the other asset classes have actually done not so well.

It's the US market that has struggled and has this negative return. But if you look at you know other asset classes or

you look at geographically you know beyond the US and Europe and Asia the global equity market as well as you know

bonds etc. these asset classes have done pretty well pretty well and pretty okay. Um it's the US specific equity market

that has not done so well over the last you know um say few months and some of these alternative assets like Bitcoin

etc and all as well. So I think like you know just for context the US equity market has actually dominated global

stock market performance over multiple decades now and this US market has generated significantly more returns

than anywhere else over the past 125 years as well. So definitely this looks like a shift in terms of investor

preference, investor allocation. Um but on a more broader level it calls into question what is known as the US

exceptionalism theory right like you know the US exceptionalism um is something that uh has been

prevalent in the market over you know multiple years where the US market has dominated returns um compared to any

other market in the world and u right now I think the uncertaintity over American policies uh it threatens to

spark a negative cycle uh that could materially dent business as well as consumer

confidence and that's what is reflecting into the equity market as you can see um on the US side right now not so much you

know beyond us so if you move forward again going a bit deeper you can see where uh most of the selloff has

happened as well the sell-off is mainly driven by the mega cap tech uh stocks as well and it kind of like again shows the

dangers of concentration risk uh if you look at the Max seven stocks for example they are down by an average of like 15

20% from their 2024 peaks um and again calls into questions about their valuations their earnings growth

potential um and also you know beyond the US as we see emergence of AI technologies such as deepseek and other

China originated technology um again that US exceptionalism theory has been called into questions. So while this

rotation may continue for a while longer, um my view and our view is that it is not wise to kind of like write off

the US equity market. US exceptionalism definitely taking a little bit of a breather, uh but probably not quit the

race yet, right? And for us as investors as well, it is important and it is kind of like very difficult to make

investment decisions during these uncertain environments, right? Um it remains kind of like unclear in terms of

how long the US tariffs will remain whether they are going to be more of a negotiation tactic rather than the start

of a long and drawn out trade war. Um and in that context I think for now it is better to manage risk through

portfolio diversification dollar cost averaging instead of kind of like panicking and bailing out on the

markets. Right? So these are things that we will talk about in more detail subsequently but let's you know kind of

like unravel what are the drivers behind this sell-off that we have seen more recently. So if you go on to the next

section, uh obviously the tariffs and the trade related policy uncertaintities

um are going to reshape US trading policy and kind of like overhaul decades of free trade agreements with both you

know the friendly neighbors as well as you know more um not so friendly countries such as China etc and all as

well. Uh so far what have we seen on the trade front right we've seen a 25% US tariff on import of steel aluminum

aluminium and this is across all countries um we have seen some uh counter tariffs from the European Union

and all as well when it comes to um response to uh these metal duties etc. But from a more neighboring standpoint,

Canada and Mexico has borne the brunt in terms of at least headline risks in the more near term. Um where Trump's

25% tariffs across the board um again calls into question what is you know going to be happening as we move

forward. Is it going to spiral into a trade war or is he using this as a negotiation tactic? Uh similarly in

China uh Trump has again enacted a blanket uh 20% tariff on top of the 10% that already existed. Now if you look at

the more you know recent trend um over the last week Trump has definitely mellowed down a bit on the

rhetoric of tariffs. So he's said that he might give breaks to certain countries in terms of reciprocal tariffs

and uh these signs have led to a little bit of a thaw in the equity markets and you can see over the last you know week

or so the equity markets starting to become a little bit more stable because there is anticipation that the Trump

administration will be a bit more flexible in terms of how they impose these duties and all. Uh beyond the

trade rhetoric obviously the bigger concern now is on the growth side. So if you move on to the next section um even

though tariffs can be inflationary the focus has clearly shifted uh on the impact of tariffs on the US growth as

that can be the deciding factor in terms of the Fed rate decision moving forward as well. Um in terms of just

recessionary risks um still still not there. If you can see on this chart as well there is slowdown in growth um but

not necessarily a recessionary environment where there is negative growth. So the average 2025 GDP is

expected to go down to 1.7% from 2.4%. Um but it is not expected to lead to a recession though the probability of

recession has increased from 23% to above 30% 35% now uh according to broader surveys that you know uh has

been done AC across strategists and analysts etc. Um as well as if you look at the Fed statement that came in more

recently um they're still on track to do two rate cuts. The MA market actually anticipates three rate cuts in this

year. Um so still on a downward path in terms of you know the rate cycle as we move forward and clearly the Fed is now

gearing more towards containing you know or or making sure that unemployment risks or growth related concerns are

addressed uh proactively rather than them you know being caught off guard. Um more importantly the third factor if you

go to the next section is also the concentration risk in the equity markets and uh the recent rise in the stock

market concentration has been the steepest in the last 60 years. So if you go on to the next section Kenny um you

see the US stock market concentration the max 7 stocks by market cap account for more than 35% of S&P 500. That's

unprecedented. Historically, such kind of steep rise in concentration has always reversed with

the S&P 500 equal weight index outperforming the market cap weighted index. So, you know, if you look at S&P

500, it's market cap weighted. If you have an equal weighted index, uh where all stocks are equally represented in

terms of weight, um that particular index has done relatively better in situations where there is

overconentration. And it's not just the Mac 7 stocks. We have seen significant shift in flows and returns uh from the

US to the European and Asia markets led by China. So again like you know we showed those uh aspects in the previous

chart as well. It kind of calls into question the narrative of US preeminence and will that remain going forward. So

again I think when it comes to um you know moving forward some of the things that are top of mind for investors is

how diversified um is a global equity portfolio that relies heavily on the US market. So if

you have a heavy US allocation um probably it's time for you to reflect in terms of how you are investing and

you know how much concentration risk you have u firstly to the US and then within US uh how how how much are you exposed

to these large cap on the mega cap stocks and uh beyond the equity market also something for you to understand is

how comfortable are you with implementations of the equity allocation within your portfolio. Do you only

invest into the equity market? Uh do you have any diversification strategy beyond equity? These are important aspects that

we will again you know touch upon as we move forward. So before doing that let's cover like you know where are we in the

market cycle right now. So if you move on to the next section. So yes so uh there are

different economic cycles. So there is expansionary cycle where it's a period of economic growth characterized by

rising employment, increased production, higher consumer spending. Equity markets tend to do well. Most of the asset

classes tend to do well in these kind of environments. Uh peak markets where you know it's the highest point of economic

activity. There is contraction recession uh where it is marked by falling production, rising unemployment and

reduced consumer spending. And you know more importantly there is this term that has now become a bit more you know in

the news over the last few weeks which is called stackflation and uh this is a period which is marked by slow economic

growth which is right now as I said shared earlier definitely a concern um but also accompanied by high

unemployment and inflation right so the fact that there is a lot of tariffs coming in it can lead to inflation but

on the other side there is concerns of you know growth slowdown. So this is something that has last happened in

1970s when there was a twin oil shock and it sent energy prices soaring and also the economic corrections happened

during that time. Today, you know, with President Trump as he ramps up tariffs on United States largest trading

partners, it has started stoking fears of rising prices again from an inflationary standpoint and then

weakening the labor market um at a time where inflation looks a bit sticky and economic growth um is already expected

to kind of like slow down. So obviously from a broader um you know Federal Reserve

standpoint such a scenario definitely puts them in a bit of a bind. Uh economists now say that the risk of

stagulation stagflation is rising. It is still relatively low but it is definitely rising and the market is

definitely also struggling a bit in terms of lack of clarity in terms of trade policy as well as you know this

changing growth outlook and all in terms of you know whether a stackflationary environment pans out or not is a

question mark but if it does pan out which kind of asset classes tend to do well and as you can see um I think in

the next section because this covers more on what happens in stackflationary economy. You can see that equity markets

generally struggle through a stackflationary environment. And again, I wish and I hope we don't enter into,

you know, a big stackflationary environment. But you can see alternatives such as gold, commodities,

real estate, investment, trusts. These are asset classes that tend to do really well in a stackflationary environment.

Why so? Gold, you know, traditionally inflation hedge. I don't personally like gold as an inflationary hedge but

definitely it is a safe haven asset and uh specifically more during economic uncertaintities including stackflation.

It is definitely an asset class that you should be caring about. Commodities again uh they are kind of like very

directly tied to increased demands and price increases. So leads to inflation or dehedging um by the nature of how

they uh are built. uh real estates and REITs uh of course has been tough investing into REITs over the last few

years. But if you look at REITs from a standpoint of inflationary environment coupled with you know slowing growth on

the inflationary side the fact that you can increase rents um it can act as a hedge against inflation and on the other

side if there is slowing growth and there is interest rate cuts it helps from a REITs you know borrowing cost uh

standpoint and all as well. Beyond that, yes, I mean treasury uh inflation protected securities or tips could be

interesting. defensive sectors such as consumer staples, healthcare, utilities are generally considered good

investments for stackflationary environment and as I said like you know equities tend to struggle uh because

it's a combination of that slow growth and high inflation and can really negatively impact corporate earnings as

well as valuations and we know the US equity markets is kind of like priced for perfection and if there is any hit

on earnings growth as we move forward on the equity markets that can really uh impact the equity markets um more

specifically on the large cap names which are definitely trading at a decent premium. So why do I cover which asset

classes do well in a stackflationary environment? It's not so much for you to time your moves and get into these

sectors. That is mainly to highlight the power of having a diversified portfolio in the first place such that you can

navigate through these situations um as and when they occur rather than you know being reactive and take these positions

uh as and when these things unfold because probably you'll be too late by the time you you take these positions.

So, we will talk a lot more about these in the next section, but is important for all of us as investors to build a

more resilient and long-term portfolio allocations rather than kind of like chasing that next shiny stock out

there. Um, all right. So, moving on to the next section. Let's now, you know, think through how do we actually invest

in market downturns. So, you know, the fact is that market downturns are fairly common. Um, history

kind of like suggests that 10% or more declines actually occur once every 30 months or two and a half years on

average. Uh, in terms of 5% pullbacks, the S&P 500 has experienced 5% pullbacks 94% of the year. So every year there is

almost um you know 90% probability that there will be a pullback of 5% or more. So we've you know seen that plenty of

times but 10% or more is also not that uncommon. It happens once every two two and a half years. So you know it's

important for us to understand that market pullbacks are just part and parcel of the game. And u since 1980 if

you you know keep going back the S&P 500 has had intra intrayear declines averaging 14%. But the important thing

is the annual returns have remained positive 75% of the time. So what that translates into is the S&P 500 rises

three out of four years. So you know in in in every three out of four years you will see a positive return on your

investment into S&P 500 and the broader equity markets as well. So what's the you know key message here? The key

message is you know look volatility is normal but if you are a long-term investor you can benefit by staying

invested and you can see that in the next chart as well that despite a lot of these periodic downturns markets

actually rise over time. So if you go on to the next section please. So yeah, so this is a very, you

know, long-term chart. You see that, you know, there are different periodic downturns, but if you remained invested

through these periods, you've actually done much, much better. Someone who invested say $10,000 in S&P 500 in 2000

will have made more than five times that money, like $50,000 today, even accounting for all these kind of like uh

major crisis and all as well. So if you go on to the next section, this is I think again very

important and we talk about it quite a bit in terms of you know why time in the market is much more important than

timing the market. Um on the left hand side you can see that you know when are the 50 best days in terms of equity

market returns and you see that more you know 50% of the best days actually happen during a bare market. So the bare

market that I was talking about more than 20% decline in S&P 500 is a bare market. But even in correction territory

there will be a significant percentage of good days that happen during bad market. So just imagine if you're not

invested during these periods you can potentially be losing out quite significantly in terms of capturing

these returns. And that's what is shown in the next you know sort of like the chart on the right. If you miss the 10

best days of investing, you will make less than like you know 54% less returns compared to if you remained fully

invested in all the days. Similarly, the returns keep going down the more days you have missed out. So 30 best days you

miss out you your average returns um will be you know lower by 83%. That's just insanely you know bad and uh kind

of like again um from an investor psychology standpoint it is important for you to remain diversified such that

you can number one smoothen your ride but on the other side remaining invested because if you try to time the market

and you know entry exit and all and I think we have a really good chart to support this as well because it captures

how you know psychologically we are built and how we kind of like chase the markets in terms of highs and lows and

all as well. So if you move on to the next section, um this is typically how investors feel

during market ups and downs. And if you see from the left hand side, the investors are like, you know, they're

seeing a trend, market is moving up. Okay, you know, uh I will wait uh wait for the markets to stabilize a bit and

then I will buy. Uh and by that time the market's already risen and now you know you're in a FOMO mode, right? Like you

know, oh markets have already gone up. if I don't enter now, I will not benefit or profit from this trend. So, let me

get in now. And as soon as you get in, the market starts to kind of like go down. Um, and initially you're like,

okay, you know, market's going down, no problem. I'll, you know, dollar cost average. Uh, you buy that, you know,

Tesla stock or some other stock and you're pretty happy with your position and you're like, oh, now I can buy it at

a discount. Let me, you know, add more. But what happens is beyond a certain buying point you cannot you know dollar

cost average because you are investing into single stocks. So you know um you have limited pool of capital to deploy

into a single stock and you I think once you get into the cascading effect of negative returns at

some point of time you will be at a stage where you just give up and you panic and sell because you know uh the

market goes down pretty significantly and when it comes to individual stocks they can go down you know 40 50%. As you

can see right now Tesla down 40% from its peak um and and a lot of uncertainties surrounding that

particular name as well. And while you can feel happy that you sold off before you know the bottom the reality is again

like you know you won't be able to come back and buy the stock until much much later. And that's typically what has

happened to most of clients. If you look at the last few years, most of the clients have been underinvested in the

into the equity markets. And even though equity markets have generated more than 40 50% returns over the last two years,

most of the investors have been cash heavy. And because of that, you've not been able to capture a lot of the

returns. And you know, while on the cash side, you would have generated maybe four 5%. uh when you look at your

returns from a standpoint of you know remaining invested you would have done much much better if you did remain

invested. Um and this kind of behavior was also observed during COVID you know that was there was a sharp selloff in

March of 2020. I you know remember very specifically a lot of clients you know panic sold during that time and the

markets recovered in a Vshape um and and a lot of clients again missed out on that rally

completely. So, you know, there's a very good um uh quote out there from Benjamin Graham. The investor's chief problem and

even his worst enemy is likely to be himself. So, we are our own worst enemy when it comes to you know tanning the

market. So, what can we do? How can we do better? Right? Uh let's focus on what are the things that we can control.

Right? We can control risk. So, you can diversify, you can reduce your risk, you can control cost. So you can spend more

time in terms of evaluating what are you investing into, how much are you paying for that investment and is there a way

for you to reduce the cost for it. Um you can give yourself a little bit more time to be thoughtful in terms of how

you're allocating your assets. If you don't have the time, give us you know the mandate. So we have our managed

portfolio strategies where you know we manage your risk. we you know do it at a very small cost and uh you know reduce

the time and effort that you need to put in on your side in terms of thinking through what assets to invest how much

to invest in what proportions to put how to rebalance and reoptimize etc and obviously the behavior part which you

know I shared in the previous slide uh are things that we can actually really control uh but unfortunately this is

also the place where most of the investors rarely focus on and the focus is always on where can I get the maximum

imm right so on the right um this is where we always trend to focus on but this is also thing that we cannot really

control. So in terms of how should you be thinking actually you should be thinking in terms of risk in terms of

cost in terms of time and behavior and then draft your investment plan rather than thinking about returns standalone

right um and what does it mean right like if you go to the next slide what are the strategies that you

can you know employ to navigate these market downturns and again like you know these are strategies and sayings that

you know we've repeated so many times but I think it is still very very important for all of us to

understand why it is important for us to reiterate these aspects to you that you should definitely spread your

investments across asset classes sectors regions to reduce your risk. helps you cushion your portfolio when certain

markets underperform, right? Like you know we talked about gold, the role of gold in your you know portfolio, the

role of you know commodities, real estate and depending on different market cycles these you know kind of

allocations will help you smoothen your journey. So very very important for you to diversify uh rebalancing periodically

adjusting your portfolio allocation to maintain that target allocation that you have. It is not so much about tactically

shifting your allocation to time the market but it is you know your more strategic long-term allocation needs to

be aligned to your appetite and a lot of us say that we are ready to take a 10% hit or a 20% hit the reality is we are

not and you know a rebalancing strategy inherently has aspects of taking profits from outperforming sectors and to

reinvest into more undervalued sectors right so rather than trying to time the market actively

You should look to rebalance your portfolio periodically. That can bring your portfolio much more you know um in

in balance and help you allocate uh just naturally into the market and you know invest into more beaten down sectors

versus you know the more outperforming sectors. And uh last but not the le least you know definitely dollar cost

average. If you are you know afraid of going and putting in a lump sum into the market um you can look at you know doing

that through a dollar cost averaging strategy and the reality is like you know most of us are earning uh on a

monthly basis. So you know we have certain amount of savings on a monthly basis as well. So a dollar cost

averaging strategy definitely you know helps a lot from a standpoint of having a disciplined allocation on a monthly

basis to the equity market and it kind of like auto averages your pricing and again helps you in a way risk mitigate

uh through these scenarios and all as well. So let's just quickly cover these strategies a little bit in more detail.

So number one on diversification if you go on to the next slide. So, if you look at, you know,

this chart, it shows the year-to- date performance of different strategies. The MAG 7 stocks down 10%, S&P 500 down

close to 4%. Um, it's not there, but Tesla is down 40%, I, you know, talked about it earlier as well. Um, so the

more narrow you are, you might have more outsized returns when the markets are up, but you will also have more, you

know, pronounced drawdowns when the markets are not so good. Right? So this is what

is happening in the equity markets. Most of us are invested into these large cap mega cap tech names and you know you're

starting to see you know some pain over there with your allocation. Uh versus if you have a more broader strategy our

core equity 100 portfolio is a globally diversified portfolio. So it's you know that ways only 1% down even though the

broader markets are much much down as you can see. And uh similarly we have a downside protected portfolio as well. So

if you're someone who's risk averse um we have our downside protected portfolio that helps you you know like cap your

losses at a certain level and if the market you know comes back and goes up it helps you capture some of those

upsides and all as well. So definitely you know if you have not looked at these strategies yet uh should definitely take

a look and if you have questions do reach out to us on the advisory team side as well to happy to answer you know

how you could employ these strategies um to to better allocate your investments going

forward. If you move on to the next section, I think this is a important slide in terms of showcasing the

benefits of rebalancing, right? Like you know it really captures the fact that you know if you have a two asset

portfolio, it is very you know simple in terms of how it is depicting things. Um there is in year one asset class A moves

by 20% and asset class B moves by 4%. Um the allocation to these two asset classes 50/50 to begin with and the idea

is we keep it 50/50. um through multiple years with rebalancing, right? Um so let's look at the difference between if

you do rebalance every year and bring it back to 50/50 versus you don't rebalance and you know keep that original

allocation. So in these different scenarios as the asset class returns pan out in the second year the asset A

actually generates a negative return versus asset B you can see that if you don't rebalance your portfolio um your

value actually can be impacted negatively because you know something that has generated negative return um if

you remain in that and again assuming this is a strategic allocation it is not a tactical allocation typically you

don't you know anticipate a 20% move but if it is a strategic allocation if something has gone down, you should be

adding onto that position. uh technically again like you know psychologically if you think about it

you should be averaging in into that position rather than you know just keeping it as is such that when the

market recovers you participate better in the upside and that's what I think this rebalancing example is trying to

showcase that in year 1 instead of keeping it at 60 and 52 which is a drifted allocation you bring it back to

56 and 56k and similarly in year two instead of keeping it at 44 and 58 you bring it back to 51 and 51 one and that

results in year three where you know when the asset class returns in terms of positive returns you see the impact of

that positive return also much more pronounced in the you know portfolio which has the rebalancing embedded

versus the portfolio that has not got that rebalancing embedded. Um lastly if you go on to the next slide we talk

about dollar cost averaging and I think it is a very important tool for all of us to remember because instead of trying

to time the market and saying that let the market go down I'll you know take my money out and when the market is you

know down at the bottom I'll come in and invest uh we shared earlier we will all miss that boat. So rather than trying to

time the market, if you want to employ a market timing strategy and specifically in market downturns like this, you can

actually look at a dollar cost averaging strategy. And in this kind of environment, it is tough to put a

lumpsum amount into the market. I mean look over a very very long term lumpsum investment actually does the best in

terms of generating you the maximum return because it's a generally upward trending market. But uh in market

downturns and uncertain scenarios and stuff like that, it might be beneficial for you to invest in a DCA format or

dollar cost averaging format or even in a trench based format, right? like you know if you've got $100 to invest right

now or $100,000 to invest right now put $33,000 now you know put you know another chunk in a you know month or so

and then you know keep keep you know adding these bits and pieces uh in chunks rather than at one go right so

again psychologically you will be you know better prepared from you know a sharp market downturn if you employ this

strategy one more thing that we tried out as you know a potential strategy is an enhanced DCA so if you go on to the

next slide side. This is something that we analyzed uh internally. Is there a DCA strategy that we can you know design

that can help you invest more when the markets fall and you know you keep your normal DCA when the markets are rising

while maintaining that consistency. So it's kind of like bringing that discipline of dollar cost averaging with

you know upward revisions in contributions when there are market dips. So essentially it still helps you

keep disciplined and systematic uh removes the emotions and second guessing because it's a strategy which is very

much mathematical in nature right and helps you capture more upside when the markets recover and all as well. So

let's see it live in action in terms of what I'm implying over here. So instead of trying to do DCA with a set amount,

you do a enhanced DCA or you double down your monthly contribution if the market say falls by 5%. I mean like we have

used an example where the market is falling 5%. You can use any other example and all as well. But if you are

someone who really wants to be a bit more opportunistic, perhaps employing this strategy um can help because you

are then buying the dip you know more and averaging your price more which means that when the market actually

recovers your enhanced DCA will generate you much better return compared to a normal DCA. And we have done some back

testing on these returns as well. Like this is just an example where you see the outperformance in you know this uh

particular example per se but we have actually done real back testing of an enhanced DCA strategy. If you go onto

the next section you see that um if you were to employ this enhanced DCA strategy during the great financial

crisis this was 200 you know 2008 financial crisis um where your normal monthly contribution is $500. So in

enhanced DCA, every time there is a 5% dip, instead of $500 a month, you put $1,000 a month, right? And your initial

contribution is say $10,000. And what you see is your enhanced DCA strategy actually did the

best. It even beat a lumpsum strategy, right? So the outperformance of the enhanced DCA was you know almost close

to 20% over here compared to a normal DCA strategy or you know in this case lumpsum uh by more than 30 plus%.

Similarly if you look at the next case study this is the interest rate hiking cycle of 2022 as well. So again $500 on

a regular DCA but in an enhanced DCA every time there is a 5% sell off you double the amount to $1,000. Again, you

know, this is a shorter time frame and you know, the overall returns are smaller as well, but you still see that

outperformance of the enhanced DCA at 7 plus% compared to DCA and you know again 12 plus% when it comes to lam. So you

know these are important aspects again like you know I wanted to highlight these from a standpoint of are there

ways for you to be a bit more disciplined in terms of you know yes um doing your investment regularly and

systematically. But if there is a strategy such as this which can be built in a more rule-based way rather than you

trying to time the market and anticipating where the market is headed next may be a better way to you know

employ a market averaging strategy uh than just like you know waiting on the sidelines. So I want to leave all of you

guys with this thought in mind and I will want to open up for Q&A. We've got I think 17 minutes to go. Um but before

that let me do a poll. Uh Kenny shall we do a poll if people generally like this enhanced DCA strategy and if we were to

you know give you this particular strategy as a tool will you actually use it?

Yeah you're right. I think this is a good point. At this point in time there's many ways we can DCA and then

obviously uh we love your insights on how to invest during such market downturns. So participants for tonight

feel free to scan the QR code once again and then I'm just going to ask you a quick question on how we can use the

enhanced DCA feature to encourage you to invest more in a more timely manner and then obviously yes could be one of the

reason and then maybe it's more towards learning more and then not interested a bit less. So overall research I think

the uh overview is pretty good. Clients do tend to want to explore such things. Thanks Kenny. I think like let's give it

a couple more minutes. I really want to see how investors are you know thinking about it because look I mean uh we are

all you know humans after all and we do want to do the best when it comes to our own investments and and this again like

is an experiment that we did internally to think through is there ways that we can do better but do it still in a very

systematic manner. So let's just wait for a couple maybe you know 15 more seconds to see if there are more people

who can put in their votes and uh if if there are sufficient like you know positive aspects maybe we can build it

out as a tool. So yeah um if you are if if you guys are keen we will definitely look to build it out on our site.

Looks like a very good response. Awesome. This is good. Thank you everyone. Um, let's maybe keep it here

and open it up to Q&A. Sure. So, right off the bat, Riches, appreciate your insights and then definitely our

investors here will understand and learn how to invest moving forward and then I really like the part about the timing of

the markets, right? We want to be in time, right? So, we don't really want to time it. I saw one important and

interesting question that you actually raised, right? is about the goal and yeah you mentioned you don't really like

it as inflationary hedge so one of the participant asked could you elaborate your reasons for that right I mean like

you know you can go back and check the history of gold in terms of being an inflationary hedge right like you know

um it it is not done you know what it is supposed to do when it comes to acting as an inflationary hedge but that does

not really mean you know it is not part of my portfolio allocate ation strategy. I mean like generally again gold has

exhibited more volatility than ideally it should. But I see gold as a safe haven asset. I see gold as an allocation

that I will do during market uncertaintities because during market uncertainties there is a flight to

safety. There's flight to you know um you know these safe haven kind of like assets like gold, like the US dollar,

like you know other safe haven currencies and all. So I I keep gold more from that perspective but I won't

invest into gold from a return generating standpoint. So for that I will look at you know other asset

classes but gold as part of my portfolio diversification strategy as part of a safe haven asset as part of addressing

the uncertaintity risk in the market it definitely warrants an allocation is there any ideal allocation any client

should have say 10 20%. So look I think u there are various studies that have been done and including like the world

gold council and typically it has been shown that if you have you know between the 5 to 10% gold allocation um it it

tends to increase your portfolio's sharp ratio um as well as you know overall riskadjusted returns. So so I would say

you know that's the typical number that people have uh suggested. Nice. Thank you very much. Okay, then um let's move

forward to the next question. I see one of the top votes is more towards uncertainty in the markets, right?

Should we buy more bonds because bonds just came down a little bit recently? Yeah, look, I think one of the you know

more prominent uh factors that dominates bonds returns are the current yields of the bonds and the reality is the current

yield of bonds are still at you know pretty high levels. So the starting yield is something that you should

really care about and the fact that the starting yields are you know still pretty high. Uh it actually bodess well

from a forward return standpoint. Right. So when it comes to bonds uh I I think you know yes I would definitely continue

investing into more bonds. There is also an aspect of the credit risk component of bonds and typically what happens is

as interest rates go down the credit you know component um widens up and that tends to um you know negate some of the

positive returns that you're generating from bonds. So bonds the way they work is like you know the returns are

inversely correlated um or or the price movement of the bonds are inversely correlated to the interest rate

movement. So if interest rates is going down bond prices go up right. So, and the reality is if you look at the Fed um

decision and their suggestion, they're still anticipating or looking out for two more rate cuts. And um if you look

at the market participants, they are actually expecting three rate cuts because they believe that you know the

market uh I mean the US economy will go through a more lean patch in terms of economic growth and that'll lead the Fed

to act much more urgently in terms of you know getting the economy back on track meaning that they might need to do

more rate cuts um than the two that they have put on their dot plot. So essentially if the interest rates do

come down broadly bonds will do really well even though you know credit spreads are pretty tight and there is an

potential for them to widen up as we move forward. So when it comes to bond investing as well if you look at our

income plus portfolio we don't have a bond portfolio I mean the bond portfolio that we have in the income plus the

duration is pretty you know in the belly uh is what I say uh in the sense that it is four to five years meaning that it

will have a positive impact from interest rate movements but if things don't go well and if there is inflation

etc and you know there are not too many rate cuts because of that uh it'll still be okay because the starting yields are

you know very good and it will cushion any downturns in the bond market uh per se. So you know that's one aspect and

then the credit spread of our income plus portfolio is also A+ and which means that you know the aspect of credit

spread significantly widening should not impact so much on our portfolio versus if you have a more high yield kind of

dominated portfolio the credit spread widening can be much more pronounced there. So if you are looking at a high

quality bond portfolio, I think it's a great time to invest into bonds. Sounds good. Thanks for that. Okay. Then uh

next question, one of the more popular one is about Warren Buffett's hash position. What are your thoughts on

that? Look um there are only those, you know, 1% uh and maybe even lower number of people who can potentially time the

market and I I consider, you know, Buffett to be one of them. Um but look I mean like the cash position they have

been building it up uh and he's known to be that value investor. So maybe he is you know trying to find those value

stocks and waiting for the right entry point and all. Again for us as investors um you know average investors I consider

myself as one as well. um it is incredibly tough to time the market and like you know again if he's sitting on

this cash pile and you know things start to look better it will have a significant drag on portfolio

performance. So while you know the cash position has become much much bigger um the reality is you know this is not a

game that you would want to have on your side on your personal portfolio if you put you know a significant amount of

money sitting in cash idle I think you know it might not work out that well compared to you know obviously warren

buffet for sure for sure so so yeah I mean again from a in terms of what you could do or should do we discussed about

all of these aspect It's like you know diversify you know rebalance but more importantly like you know keep investing

uh number one keep keep your money invested but employ DCA strategy or an enhanced DCA strategy like you know

these are ways for you to you know uh kind of like time the market a bit in a more systematic manner right then I also

saw one question right which is all the way at the bottom I think it quite align with this question which is more towards

how much should a DCA because assuming you want to do the enhanced DCA, what's the allocation that is ideal? Yeah,

look, I think uh again uh we did this analysis with uh a very you know base kind of case in mind. Um we did it with

a 5% draw down because you know I shared this earlier as well a 5% draw down almost happens every year. So every year

at least one time you will employ an enhanced DCA if it is you know 5% draw down and you double your investment

every time and um if we also experiment by experimented with different you know threshold so we did with minus 2.5% so

then the number of times you do enhanced DCA is you know say three times a year right compared to you know a normal DCA

um and even in terms of the amounts to invest typically look I mean we again if you go back to the fact that we earn on

a monthly basis and we save on a monthly basis. we have usually a set amount that we can allocate to investing right um

the enhanced DCA strategy can stretch you a bit but I think it is still reasonable in terms of just doubling

that money because if you are you know putting $1,000 a month and say that is you know say 10 to 20% of your savings

every month um it is possible for you to stretch yourself in certain months and double down uh when the market does

present you that opportunity so I I believe like you know it cannot be like three times four times. If that is the

case then you are basically underallocated to the equity market in the first place. That means like you

have too much cash sitting idle which is definitely not the thing that you should have um if if you want to you know

employ that long-term investment strategy per se. So ideally, you know, beyond your emergency funds, if you're

saving at least 20% of your, you know, monthly income, uh, normally you would invest between 10 to 20%. Uh, of that

monthly income and in an enhanced DCA, you stretch yourself to invest maybe, you know, 25% for a few months, right?

So, so that's how I would typically see. Sounds good. Even I myself practice this and then I like to double down when the

market goes lower then we get more positions as it goes lower right so moving on we'll touch a bit more on the

popular questions this is more towards the Chinese market right so with all the war going on the trade war right uh what

do you think about the markets investing in China yeah I think this is a good question and again um the Chinese market

has been particularly difficult to invest into over the last few years and um a lot of clients have you know given

up um as as you know I shared earlier as well um because it looked like this was a tunnel where there was no light at the

end of the tunnel but suddenly you know coming into this year we saw like the Chinese market is the best market right

like you know so definitely um in terms of what's happening in China at least from a domestic standpoint

there is a lot of um policy um implications and there is a lot of uh intent to move uh in a direction where

the policies uh within China are much more supportive to their economic growth and a lot of these were previously

anticipated and expected and only now you are seeing a lot of this being implemented as well on top of that

you're seeing a lot of innovation coming from China as well like you know you saw deep CKI as soon as that news broke uh

there was a large selloff in the US equity market and you know again flows coming back into the China market. Um

this year again from a return standpoint dominated a lot by China. Even last year China you know came back with you know

quite a prominent return uh towards the second half of the year as well. So what we are seeing right now is probably you

know the resurgence of China and from a valuation standpoint as well if you look at the broader equity markets there are

very few markets where you can see you know the valuations to be reasonable China is one such market where you know

we've talked about this previously we you know talked about China in our start of the year market outlook as well uh

and this was like a contrarian you know view that we put uh as well where we said that you know China should be part

of your consideration and allocation um because of you know a number of factors the policy related intent the you know

innovations that are coming from there um and um you know what you're seeing right now um in in terms of you know the

the broader you know Chinese market moving forward at a much rapid pace um as well and flows coming in into that

market as well. Now, in terms of specific ETF recommendations, um I I won't be able to recommend specific

ETFs. Um there are a fair bit of those available. Um but if you want a more straightforward access, you can look at

our China growth portfolio. Um that focuses on a mix of uh the new China uh policy implementations, right? Like you

know, it invests into the new China economy as well. So it invests into companies which um will help drive the

innovation trend within China as we move forward. So whether it is the EV, whether it is healthcare with the aging

population as well as the consumerism. So China as a market is moving from an exportoriented economy to a consumption

oriented economy and all the you know effort that the government and the you know uh central banks are putting in uh

point to the fact that uh China will you know definitely start to look much much better as we move forward and there will

you know this was more of a stabilization phase uh so far and we are looking at a more brighter outlook as we

move forward. uh obviously there will be this trade overhang so I'm not discounting any of that so that will

impact China to a certain extent but um on a more longerterm basis it's the economic strength that will determine

how China market fare and that I'm fairly positive about and the valuations are supportive too nice okay then ret

with the interest of time I will let you choose one or two more questions then I'll probably close it out from there

all Right. Uh, you're saying I pick up or Oh, okay. Um, I think there's a couple of

questions on QQQ and US tech stocks and I think we covered earlier as well. A lot of investors um have um concentrated

positions into these particular names. There are various ways for investors to kind of like diversify away. Again, I'm

not saying that there is a stackflation that will happen, but how do you move beyond the MAX 7? How do you move

beyond, you know, these mega cap tech names? Um, the few ways that you could look at is like you can look at an equal

weight index on S&P 500. You can look at you know certain sectors that are much more resilient during these market

downturns and uncertainties and stackflationary environments like you know healthcare utilities um uh and and

and some other you know industrials etc which can be more domestically benefiting from Trump policies etc and

all as well but um again more importantly at this stage you're looking for companies which have strong modes

and uh this is something that again we have implemented in our equity 100 portfolio as well you can see we have an

equity 100 portfolio where beyond the market cap

um you know allocation into S&P 500 we have the equal weight allocation we have allocation to MOT ETF where we invest

into companies which exhibit um you know characteristics of value so value stocks have been underperforming but it you

know the mode ETF is special because it combines value with quality and when you combine value with quality it helps in

terms of identif ifying companies which are not just value traps but are quality companies which just are

underappreciated in the market. So that particular strategy could work well alongside you know some of these

defensive sectors etc that we talked about. And of course beyond the US market you know our equity 100 portfolio

also has slightly higher allocation to China compared to you know a broader say all country world index. Our China

exposure is roughly in the 8 to 10% range versus an all country world index has around 3% allocation to China. So

you know we think of China as part of a strategic allocation and that's why you know we uh believe that China is kind of

like underallocated in a global investment portfolio. So if you are looking for a more globally diversified

you know allocation uh yes definitely this these you know times are the times where you can reflect back and look at

your portfolio and take these you know actionable decisions. Uh but if you again don't have the time you can take

and take a look at how we are managing the equity 100 portfolio and if you want to implement it yourself you can do so

too but like you know if you want to automate your investment then obviously you know we will do it for you as well.

Sure sounds good then uh you want to take one last one before we close it off or we can uh hit directly to the uh

advisory email. Uh I think I'll take the last one you know where uh Sanker is asking that he's invested into the

income plus portfolio for three months. Is it the right time to rebalance to S&P 500 or the downside protected portfolio?

Look, you know, in my opinion, it is not one versus the other. If you have invested into the income plus portfolio,

you should be clear in terms of what objective you're trying to solve for. So, if you are trying to grow your

money, income plus probably is not the best place in terms of growing your wealth, right? Like, you know, then

obviously a more equity kind of portfolio is the right place for you to put money. Um but if income plus is part

of your overall allocation where you have allocation to equity and then you have some allocation to equity then yes

it makes sense but beyond that I think an income plus portfolio is meant for you to generate regular income and you

know at a low volatility kind of framework. So our income plus portfolio um I think fortunately at this time of

the market it has aspects of capital gains that you can you know have as well because again we are at that market

cycle where the you know starting yields of the bond market is pretty high and if rate cuts happen then the bond prices

increase as well. So you not only get the benefit of coupons and dividend income but you can get some capital

growth as well from an income portfolio. So I think like you know while that is true you should really evaluate why are

you investing into an income portfolio. Is it part of your overall allocation then think through how much income

allocation you want to have in a growth oriented portfolio. If it is part of a dividend generation you know uh strategy

or a regular income generation strategy then you should not be in investing and rebalancing to S&P 500. It's a

completely different objective. In S&P 500 you invest to grow your money over the long term. Right? So it's very

important for you to understand why you're investing into these different portfolios. So it's not a question of

one versus the other but you know what are you trying to solve for. All right. Sounds good. Then uh for now I believe

we still have a lot more questions but uh with the interest of time we may not be able to answer everything. So I would

love to invite everyone here to submit your questions to our email which is advisory.com

and then in this page here zoom we also included the resources so you can actually connect with us to speak to the

advices to know more about the services and the kind of things we offer. So feel free to submit your questions to us and

then we love to take more questions from there and then retach do you have any closing thoughts for us? No, I'm just

amazed to see the number of questions that have come in and apologies again. I have not been able to answer each and

every one of them, but please do send it out to us and we will, you know, um make sure we reply back to you. Um but yeah,

I mean um interesting times in the market. Um don't panic, stay invested and uh yeah, reach out to us for any

questions. So, thank you everyone for joining in today. Thank you everyone. Feel free to sub me your feedback also

then we can see how else we can improve our contents and valuable insights. I appreciate everyone's evening today.

Happy to see you all today. Bye.