The Market Valuation always directly proportional to the portfolio returns positively or negatively when are are holding the sizable equity in the portfolio. At every market level, I find people in exact opposite side of valuation theory.
Now investor having sizable equity exposure in mutual fund / direct equity will be always confused whom I should follow, Is my market theory fool proof, should i continue or pause my SIP. Now lets see who will help us,
Direct Equity Investors
If you followed recommendation from others, no one can help you. Either you can’t reach the person who gave you recommendation or his/her views changed a long back.
If you followed a process for valuing the business, be true to your valuation and take a call.
If you followed a Do it yourself(DIY) strategy of doing SIP in stocks without a process, only god can help you.
In short, direct equity investors have to take their own responsibility for the every transaction and you should assess valuation of the business in the portfolio.
Mutual Fund Investors
Portfolio Managers
The Portfolio manager’s scope is very much limited to scheme’s portfolio. He/She will not be held responsible for the each and every unit holder’s personal portfolio’s.
Portfolio Manager can change allocation to reasonably valued stocks in relative to the overvalued stocks or stay in cash. By any-means it will not guarantee you the positive returns or reduce the risk profile of the scheme.
Portfolio manager’s responsibility is follow the scheme information document, investment process and beat the benchmark. In interviews they may say its overvalued, but they cant reduce the equity exposure to 0% in schemes. Risk profile is always high if its equity oriented fund.
Mutual fund Distributors(MFD)
MFD’s advise always depends on his/her understanding on your risk profile. In general MFD’s push for fancy NFO’s, low AUM Schemes or with high trail commission Schemes. Sensible MFD’s might provide/guide you with mix of Mutual fund Schemes to align with your risk profile of the goal you discussed with him/her.
I don’t know how to interpret the MFD’s Incidental advice. MFD’s have to prioritize the Investor over the trail commission. If portfolio manager is giving interviews with market overvaluation comments, MFD’s should not push the those schemes just to earn commissions.
My opinion is assess the asset allocation of you portfolio and check whether the goal planning is in right track. Your portfolio is personal for you. Always consult with authorized person (where you can expect minimum ethics) for the products you are dealing with like RIA/MFD. For short term goal, never have an equity exposure.