How To Bulletproof Your Portfolio Against Uncertainty

The right strategy and tactical moves, with a dose of long-term discipline can help you build a bulletproof portfolio that can stand the test of global uncertainty

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Global uncertainty almost always hits local markets negatively, and India is no exception.

From the subprime crisis in the US to the Russia-Ukraine war to the enhanced tariff imposition by US President Donald Trump which can affect international trade in a big way (though the tariff moves have been paused now), such events lead to volatility in markets worldwide.

The effect such events have on the markets impact the portfolios of retail investors directly. More and more people in India are equity investors. The proof is in the pie—the numbers of demat accounts and mutual fund folios have surged in the past three to four years.

In such times, the key question for Indian investors is how to build a portfolio that weathers such market storms without being affected in a big way. Let's explore some of the factors that can help investors bulletproof their portfolios against uncertainties.

Choose Quality Over Momentum

Sticking to quality stocks is always advisable, but it volatile times, it can prove to be a defining strategy. It makes sense to prioritise companies with strong balance sheets, robust cash flows, and sustainable return on equity.

Stronger companies with low debt and established governance norms are likely to show resilience in the face of volatility over the long term. They are also likely to recover faster after any economic downturn.

At the same time, stay away from stocks that may be riding the momentum but may not be able to withstand economic shocks that may lead to tightening liquidity.