When there is FREE money (almost) to be made, make it big.
The example of IT Index recently is one such case. I did not know which IT firms to pick, so I picked the entire Index, invested big.
And, now I am enjoying the gains.
Your next question would be: till what point should you HOLD IT index?
The answer depends on your horizon.
[1] In the short-term the channel is likely to be followed: (check image)
[2] In the long-term the all time high is likely to be achieved. This is around 15% additional gains from this point.
[3] Point #2 is likely to be achieved when the US Market does well. This according to me is likely to take 6-8 months (very difficult to time though) At this stage, I am neither bullish/bearish on IT Index. If you have no better reinvestment opportunity, you can simply continue. And, play the long-term game.
Else, if you are underinvested in some clear ‘value buys’ (you could cut some positions)
PS: Not a stock buying/selling reco. Simply sharing logics. I will also write a separate post on: how much ‘opportunity fund’ you should start creating. This is a critical step at this stage.
