Adaptive Plan

Adaptive investment approach aims to deliver consistent returns by adapting to the ever-changing market conditions. In this strategy we adjust investments to reflect market conditions such as the volatility, the current condition of the market (Bull or Bear).

This strategy is complete opposite of Buy and Hold strategy. History clearly shows that buy and hold does not work in real life. Markets may stay down for several decades (see examples below).

There are five serious problems with this approach –

1. Severe mental stress plus setbacks to health: Ask any senior investor who has faced 1992 scam, 2000 dotcom bust, and 2008 financial crisis, how it feels to helplessly watch your stocks crash and your hard-earned money losing value drastically. Even if the markets recover after few years, you may not recover from health setbacks (diabetes, heart problems, depression, …).

2. You may lose a lot if you stay invested for long at wrong time: Most new investors believe that in past, the markets have always recovered after 1-2 years, so staying invested for 5 to 10 years will always create great wealth. The fabulous 100 years chart of US Dow Jones Index below (Source: Chris Kacher, managing director of MoKa Investors) shows that recessions and recovery can last for very long period. This great chart shows clearly that it is extremely risky to assume that recessions last just 1 or 2 years. It is necessary that we remain prepared for the worst by learning from the history.

During the first 100 years of this chart, US markets spent 60 years (19+25+16) in recession and recovery only! Although this chart is for US, but the stock markets move together all over the world.

These points should make it clear that investing for long term may not be beneficial all the times. When all indicators are flashing a serious warning, we should actively reallocate our assets. If stocks are not expected to do well, maybe some other asset class will perform better. The problem with exiting from stocks is that most of the times people do not believe that a serious bear market can happen.

This plan seeks to recognize the current regime in the market and then capitalize on the knowledge. We would be investing in stocks of high-growth companies during a bull market and then flee to a combination of debt/cash/rentals/commodities in a bear market. The investor can expect positive returns while avoiding the loss of capital in major downturns. For every recommendation, we also suggest proportion to be allocated. For example if we recommend gold at a particular price, we would also mention what should be the proportion of gold investment in your total portfolio.

Strategy during bull markets: During a bull market, we recommend stocks based on a growth oriented strategy as explained here.

Strategy during bear markets: Assets like gold, silver, many other commodities do well during an inflationary regime. We recommend the best option considering the domestic as well as global macro-economic environment.

We offer two Adaptive Plans, the strategy is same in both, but the options available are more in Global plan. The India plan will recommend only those securities which are listed in India, whereas the Global plan will also recommend US listed stocks and ETFs.

• Equity: Stocks listed on NSE and BSE, plus Indian index ETFs
• Debt: Indian mutual funds
• Other asset classes: Indian ETFs of commodities and real estate. About 150 ETFs are listed in India.

• Equity: All in India plan plus US listed stocks and index/sector ETFs
• Debt: Indian mutual funds
• Other asset classes: All in India plan plus US ETFs of commodities, real estate, other asset classes, factor ETFs, inverse ETFs, leveraged ETFs, and currency ETFs. There are over 3000 ETFs listed in US.

We understand global macro-economic environment, our past long-term forecasts on markets, assets, and sectors have been 100% correct. See our major forecasts, posted publicly –