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| Bull markets come and go, but the story of the retail investor follows the same script every time. When the market is about to take off, retail investors are held back by memories of the last bust.
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| But as the party continues, they allow greed to get the better of them. They enter the market just when the smart money is heading out. The crash comes after that.
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| Most of them lose their shirts, and retire to low-return fixed-income avenues to lick their wounds. Will it be any different this time?
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| The current bull market -- now 12 weeks old -- is again putting temptation in the way of retail investors. Should they yield, or say a firm no?
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| The answer to the question depends on whether you think the rally has some distance to run, or is about to lose steam.
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| When we asked some of the people who are actually interacting with retail investors, and even advising them, the answer seemed to be a qualified yes: equity is the place to be, but understand your risk appetite before plunging into it with your last rupee.
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| The backdrop to the bull run is clearly the positive trends in the economy and stock fundamentals. The Sensex touched a 26-month high last week just as the rupee was hitting a three-year high. Average equity mutual fund returns for the last quarter are also at a three-year high.
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| Dividend yields in many stocks are at an attractive 5-10 per cent -- comparable with safer avenues. GDP is expected to grow at more than 6 per cent.
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| FII investments in the equity markets are zooming, with foreign funds pouring $554 million into the markets during June alone. Interest rates do not seem to have bottomed out, but may be close to doing so.
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| Add healthy corporate performances and expectations of a good monsoon this year, and the investment scenario in India looks good indeed.
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| A case for equities
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| Considering the conditions, what is the right strategy if you are a retail investor? According to an overwhelming majority of financial advisors, there is no getting away from equity.
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