Key Points
It is the new money where we are telling people be careful and invest carefully, do not invest only in pure equity, invest in across asset classes because if you invest only in pure equity and you say yes, I am going to invest in smallcap after a three-year 40% CAGR, then the risk is higher..
So, invest in all the asset classes, invest in debt also through hybrid strategies and that is what we are telling people..
When we went back at ICICI and looked at what was the way to avoid the mistakes, what we found was asset allocation is the only way to reduce the mistakes and that is what we are telling people at this point of time because if you had practiced asset allocation in 2007, the mistakes would have been much lower; if you had practiced asset allocation in 1994, the mistakes would have been much lower and that is the lesson which we have seen in bull market which works very well and today we are clearly in a bull market..
We used to tell them markets always function in cycles, you do not need to do anything, you will find surprisingly at some point of time in future because of the good work that you have done, your stocks will become costlier and even we could not have imagined in the next three years the PSUs have moved from being one of the cheapest segments to the market to a situation where some of the PSUs are today overvalued and it is because of the good work done by some of the PSU managements, the way some of the government has also ensured that the PSUs have worked in the interest of the shareholders but that is a funny thing...
You can use some conventional metric, you can look at some of the price to book, you can look at some of them on price to earnings, you will know which are the stocks which are overvalued by just looking at the price to earnings and price to book and it is difficult for me to talk on specific stocks because if you look at the implied valuations which are there in some of the stocks, in some of the smallcaps for example, they are all in building a lot of things at this point of time and that is why it is difficult for me to point out individually...
