Page 26 - Masala Lite Issue 165 September 2024

26 CASH COURSE WITH ATUL

Politics Is Only One Part of The Picture
IGNORE Even though those in charge may have a say in public policy, there are many other
factors that also influence your investments. Investing based on fundamentals of
the asset – the company, commodity, etc. – will be influenced more by the actual
POLITICS underlying asset. If you invest in equities, fundamentals such as financial health,
management quality and growth prospects will have a larger impact on the value
of your investments. Politics can cause short-term volatility, but strong companies
tend to perform well over time regardless of political changes.
TO INVEST A well-diversified portfolio is designed to withstand various economic and political
scenarios. By ignoring political fluctuations and sticking to a diversified strategy, you
can mitigate the risks associated with any single political event.

BETTER Focus on What Is Predictable
Political developments are difficult
to predict, so do not make decisions
based on hunches. Doing so is a
recipe for angst, if not inferior
performance. The chances that you
have information that financial
A Brief Summary:
markets do not is small, so there
• Letting political developments and your feelings about them shape your aren’t many arbitrage opportunities
investment decisions can be counterproductive. (the possibility of profiting from price
differences of the same or similar
• Fundamentals matter more. If you are a long-term investor, your investing
lifetime will be far longer than the politician(s) that are making the headlines assets in different markets). Markets
today. are generally efficient at incorporating new information, including political news. This
means that markets often quickly adjust to political changes, making it challenging
• If you apply diversification prudently, any political fluctuations will be unlikely to gain an edge by reacting to political events.
to derail the likelihood of success, however you define it.
Use It to Your Advantage
• For those that make regular investment purchases – like tax-exempt funds
in Thailand (SSF, RMF, ESG) – you can use volatility created by political noise If you make periodic investments, you can use any volatility caused by politics to
to make purchases when prices fall. your advantage. Markets do not like uncertainty, and usually see heightened selling
when there are changes in the political landscape. You can use these windows as
opportunities to make your purchases.
Do Not Get Sucked In
Even though politics may have some impact on our lives, it is advantageous to ignore
it when navigating your investment life. Letting politics – and commentary around Atul Sethi is the founder and CEO of Farnam Tree, a
politics – influence how you allocate your investment dollars can be counterproductive licensed boutique investment firm based in Bangkok.
for many reasons.
Atul has over twelve years’ experience working in
For one, these matters tend to evoke strong emotions. Emotions regularly impair investment banking and as a research analyst, prior
rational decision-making, and this is no exception. Instead, focus on the long-term. to starting Farnam Tree.
Your investment time horizon will be longer than the current politicians you dislike,
so do not let them impact your behaviour.

MASAL A LITE ISSUE 165 - SEPTEMBER 2024