Do you know the wood or the tree used to make the wine corks takes 25 years to grow? The farmer sacrifices around 25 olive crops or 50 crops of cereals to get these trees after 25 years of Patience. Value is made by putting some resources and time is one such resource. In equity also one has to look beyond cycles, beyond bull runs & see future. Here is equity market outlook for 2018.
The bulls are leading but here are we in 2018 when we see politics in turmoil and markets are getting jitters about abolishing or extending the Long Term Capital Gain Tax.
So far good news is that little Rocket Man & Twitter God are happy and talking sense.
Most of the fund managers have made it clear that 2018 will be difficult to make money. The message is clear that 2017, especially last 2 quarters were insane and finally, we may see some heat, some bubble getting deflated.
And, here I am your WealthWisher, reiterating the message that Equity is and will be for investors who can learn and exercise patience.
Some other interesting facts about wine/champagne corks & industry
- There are 2 companies in the world who command 50% market share – Corticeira Amorim & Oeneo. Both are listed.
- Both are super high-class profitable companies. They have made 10X returns in the past 10 years.
- This is an industry where one generation plants trees and probably next one enjoys the benefits.
- Although corks can be made synthetically but will they long 200 or more years? They have not been tested so far.
- If the cork does not last- the wine or liquid gets in a touch with air and it’s contaminated.
- If the cork rusts or decays, it will spoil the wine.
- Corticeira Amorim, was responsible for preserving the 168 bottles that were found underwater from a shipwreck drowned over 200 years ago in Baltic Sea. Two bottles form these were opened during the new year celebration this year.
- Corks have alternatives but they have not been naturally tested for 200 years. This makes these 2 companies owners and corkwood supplier millionaires.
2008 Anniversary
Markets touched the highest point on 8th Jan 2008 before collapsing -58%.
We are exactly 10 years ahead of that loss-making event . But look at the long-term record of last 38 years. See what markets have done for you provided you were in it.
Last one year was just like an arrow straight. Market backed by huge inflows did not stop for a gasp.
People familiar with it know that this is not normal hence they have been maintaining or shifted their portfolio to value.
equity market outlook
2018 will be a year of consolidation. We are unlikely to see disruptive reform like demonetization or GST in the run-up to the election. These will allow the economy to benefit from the past reforms.
The economy will continue to face the hurdle of over GST & low GDP till fundamentals prevail. We also yet to see benefits of-of lower rates.
Headwinds are building up in the form of higher crude oil prices, lower GST collections, fiscal slippage, high real interest rates and deteriorating current account deficit.
While a majority of investors are coming reasonably well informed about the Volatility of returns and need for long-term investment horizon, a minority indeed is coming looking at the past performance. They think 2017 will repeat in 2018.
Many investors tend to view mutual funds as equity funds only.
We need to understand that debt funds also are required for a balanced portfolio and to face volatility.
This will be a challenge especially when last 12 months savings account has given more return than a bond fund. But it’s the way assets move. If your portfolio had equity and debt both, you won’t be complaining at the movement.
We need to stress on the need for asset allocation and longer-term investment horizon.
Final Words,
Outlooks will be information only. the equity market outlook are just figures.
You need Patience & Wisdom at the moment. Which can be learned by reading & learning history & present.
Hope you are in sync with me on these 2 virtues.
Will wait for your comments and success stories below. And, sharing buttons on this page will help you spread the patience to people who require equity market outlook for 2018.
