The past six months have been pretty tough for the Indian markets. Everything which was going right, did go wrong and some more. It’s one of those times when everything which you believe to be true, turn out to be false. India, which was going uphill as the worlds’ fastest economy took a pause, the Industrial growth slowed; inflation went up and corporate earnings dropped. Indian market which looked cheap at 26200 are suddenly too expensive at 22800, size months later.
So what are we seeing here.
First of all, some myth busting times. A lot of the gurus on TV and X are incessantly telling us that we retailers who came during or after Covid haven’t seen any fall and thus, are inherently prone to a downside risk. Well, people have short memories in the markets. The Nifty which peaked out at 18000 in October 2021 gave absolute Zero return for two years, until it took that point out again in September 2023. It fell all the way to 15800 and all the post Russia-Ukraine, Nasdaq meltdown, Crypto frauds, etc happened during that year. Well, that’s just 17 months ago.
Second, people are crying over the fact that the equity will give negative returns and how the SIPs will turn out to be a dud, etc. In summary, Indian markets are up just around 90% in 5 years, which is from just before Covid to now. So, it’s not that we have had some 40% CAGR for five years and the markets have gone to bubble territories, etc.
Thirdly, a lot of this S Naren kind guys have been crying about valuations being too high for more than two years. The wolf will eventually come one day and then they claim to have prophesied the fall. It’s kind of nonsensical to keep predicting every year that the markets will fall and of course, in one or the other year, they do fall. This is nothing but rabble-rousing to popularise your asset allocation mutual fund product.
Let me put this straight. A retailer is here to first make some money. He does not even have assets to put in an asset allocation fund. This all financial planning nonsense which is being served by influencers and mutual fund touts telling us to buy gold and real estate and FD and equity and how to allocate x% to Large caps, Y % to mid caps is pure bullshit. You are telling this to a guy in his 30s who is only trying to put 10-20k in markets to buy gold? I mean, will he buy 2gm gold with that? And will he buy handle of a door of a flat with 20k? How do we even allow such gobbledegook in the name of investor awareness.
Asset allocation is right but only for someone who has at least a million dollars to allocate. For everybody else trying to make some money of their hard earned savings, the only thing which works is equity. It has the highest liquidity, maximum transparency, lowest cost and taxation and above average returns. You don’t trust me? Try buying a plot of land or a bar of Silver and show me the contract note you received on your email. Oh you didn’t receive it. Yes, that’s the point.
So the first thing you must do is to remember that we are in the biggest wealth creation two-decade period this country is going to witness in the next 50 years. We will go from 3 to at least 12 Trillion Dollars, even at the slowest possible growth rates and the absolute amount of money that will be made will be stupendous. So the only thing you’ve to do is to remain in appreciating assets- Equity, Either through buying good quality stocks directly or through equity only mutual funds. No bonds, no asset allocation nonsense until you’re above a Million Dollars.
One more thing which Im sure the folks are wrong are regarding the small and mid-cap universe. They’re such hated these days that nobody wants to even touch them by a one meter pole. And friends, the first rule of investing is to buy what’s hated. And buy when there’s blood on the street and right now, there’s a huge spillover around.
I generally avoid predictions because it’s a fool’s errand but Id assume that the excessive selling has taken every last ounce of froth out of anything and everything. Any stock which could have fallen has fallen; anything which was expensive is not anymore; anybody wanted to dump $10B in a stock has done that. So the only thing left is for the markets is to go up.
Id take you to one more myth. When the markets hit 13K in January 2022; it fell around 10% so sharp that the bets were off. We forget such moves because we are being told they never happened. And then the rally to 18K happened in six months period. Please remember, the markets will fall 15-20% every year or two and these people who ask you to buy at 26k will beg of you to sell at 22k. They’re in the game of stock entertainment and commissions, you are here to make wealth and change your life.
Don’t even think of getting off the boat; it might have already sailed ahead!
Disclaimer- The views expressed in this blog are personal opinions and are shared for educational and informational purposes only. They should not be considered as financial, investment, or legal advice. I write primarily to document my own learning and thinking process. I am not a SEBI-registered investment adviser, research analyst, or financial influencer, and no part of this blog should be seen as a recommendation to buy, sell, or hold any security. Please do your own research or consult a qualified professional before making any financial decisions.
Life is all about Compounding! 