Market Strategist Devina Mehra Advises Caution on Gold and Silver Investments
In a detailed discussion with Mint, Devina Mehra, the founder, chairperson, and managing director of First Global, shared her insights on current market dynamics, asset allocation strategies, and the role of precious metals in portfolios. As global uncertainties drive investors toward traditional safe havens like gold and silver, Mehra highlights why this approach might be misguided without proper diversification.
Reading the Current Market Sentiment
Devina Mehra notes that the prevailing cautious mood among investors could actually signal a positive contrarian indicator. She observes that an increasing number of commentators are openly discussing market risks, shifting away from the usual optimistic narratives around India's growth story. Historically, broad pessimism has often preceded market recoveries, though Mehra cautions that short-term predictability remains elusive.
Key Drivers and Concerns for Markets
Mehra expects corporate earnings to improve starting from the December-ending quarter, supported by falling interest rates that benefit equity markets. On valuations, she argues that they align with historical trends when analyzed industry by industry, rather than at index levels where composition changes can distort perceptions.
However, fiscal concerns loom large. Tax collections are falling short of budget estimates due to weaker-than-anticipated nominal GDP growth, raising questions about the government's fiscal headroom amid discussions on capital expenditure and support measures.
India's Global Underperformance and Currency Impact
In 2025, India ranked among the weaker-performing equity markets globally, approximately 36th out of 42 major markets. Mehra points out that historically, markets near the bottom of performance rankings often bounce back in subsequent years, though she avoids one-year return projections due to equity's inherent unpredictability.
A significant factor behind India's underperformance was currency depreciation, with the rupee falling nearly 20% against the euro. This depreciation negatively impacted returns for foreign investors, making Indian market returns in euro terms negative for the year.
The Role of Gold and Silver in Portfolios
Mehra emphasizes that precious metals should only constitute a single-digit allocation in a diversified portfolio. She debunks the myth of gold as a low-risk safe haven, noting that its dollar price has historically been more volatile than the S&P 500 over long periods. At current prices, she questions the wisdom of adding meaningfully to gold allocations, citing historical drawdowns of over 60% and a 27-year period before surpassing its 1980 high in dollar terms.
In rupee terms, gold often appears more attractive due to currency depreciation, a factor that made it a viable option for previous generations when overseas investments were inaccessible. Regarding silver, Mehra maintains a combined single-digit allocation with gold but warns against dominant positions, as silver has already tripled in rupee terms over the last two years, making further upside difficult to assess.
Global Equity Leadership and Concentration Risks
Market leadership has narrowed globally, with a handful of large technology stocks driving most returns. In the US, seven major tech stocks contributed 43% of the S&P 500's returns this year, down from over 60% in 2023 and 2024 but still elevated. This concentration is evident worldwide, with AI themes fueling tech dominance in Asia as well.
Beyond US AI plays, tech stocks in Asia have performed well, and China along with broader emerging markets has delivered strong returns recently. Mehra's portfolio strategy includes being underweight the US, overweight Europe since early 2025, and overweight China for an extended period, though the US remains the largest allocation relative to benchmarks.
Geopolitical Risks and Long-Term Implications
While geopolitical events may cause short-term volatility, their long-term impact on markets outside directly affected countries tends to fade within months. Mehra expresses greater concern over structural shifts in the US's global standing, particularly regarding institutional credibility, rule of law, and the independence of bodies like the US Federal Reserve. These changes could have lasting implications as the post-World War II global order undergoes dismantling without a clear replacement.
Core Advice for Investors
Devina Mehra advises investors to focus on data, asset allocation, risk management, and long-term discipline rather than headlines. Markets often defy predictability, as seen in 2020 when liquidity and policy responses drove gains despite economic collapse. The key is to remain diversified, avoid overreacting to short-term narratives, and acknowledge that uncertainty is a permanent feature of investing.
This discussion underscores the importance of a balanced approach in navigating today's complex financial landscape, where chasing perceived safe havens like gold and silver may not align with optimal portfolio strategies.
