The year 2017 will be an easy winner in the category of “most entertaining year”. When analyst are busy reading horoscope of next year and trying to decode the markets 2018 India and Indian investors really have many learning from the history of 2017. This year really tested us – Our Behavioral Skills & Mental Toughness.
This year main highlights
Bitcoins: The rise and fall both surprised us. But the most important question was – What gave birth to this giant attention seeker. Entire world lost interest in Trump and started reading about it.
Dmart: A company in the traditional business of Retail is commanding the price it should have in the year 2029 factoring the growth rate. It started with an IPO and then this year saw more than 125 IPOs.
Jio: All of sudden every mobile/landline company has started distributing 10 to 30 GB data per month to Indians who do not know what to download. We had adjusted the surfing with respect to available data. But now supply is even more so no one listens to songs because we watch them now. Revolution…
Gabbar: GST was called Gabbar Singh Tax by Rahul Gandhi, but people have adjusted to GST but this jumla (saying) has made India a real two party country now. Gujrat elections have clearly made way to end the monopoly of one party. It’s going to be battle of equals now. 2018-19 on political terms looks very much volatile.
Kim Jong: The little rocket man is busy making missiles and telling that the US is not the market to diversify. With every test or every day of progress, the world is inching toward a war that could trigger economic sufferings. No one cares about your goals, your retirements… you are alone when it comes to investing.
Doklam: The fear of war with “mother of dragons” kept each of us on toes. Markets could bear worst but – WAR WITH CHINA? Finally stand-off cooled down when both “Supreme Leaders” could boast of their expertise in managing neighbors.
Bitcoins?… I am happy with my 314% in equity and 39.4% in MF returns (XIRR)
Fortunately, I am not one of the people who has enjoyed the two thousand plus percent return of BitCoin this year. I have spent a lot of time studying it, and in full conviction, I see that it does not fit the definition of goal-based investments – Which I make and I deal with.
I am an advisor and investor to fundamental based investment strategies, I am just not wired the way cryptocurrencies operate and the world in which they are traded – the hidden exchanges and dark chat rooms. I feel like I really need to understand an investment, and the “why” behind it before investing. That has served me well historically but can also prevent me from getting into rapidly appreciating & depreciating schemes like this.
For those who do own crypto assets, congratulations. You are likely sitting on gains that typically occur once in a lifetime and you should be commended for taking the risk. Sorry but I don’t feel a FOMO (fear of missing out) here!
Should I stick to Value Investing or venture the bubble?
Many stocks or MF schemes have given extraordinary returns riding the stocks that do not command fundamental values. They were bought at a high price – which clearly does not fit the value investing criteria.
Last 1 year has been the classic lesson of history when we saw in the first half quality stocks gained and in the second half, the low-quality stocks gained more than the quality stock. Typically again when the realistic scenario will surface (after a correction), the quality stocks will lead.
So, in a bull run, value investors will have to face time of sluggish growth. Sometimes this time can be for more than a year.
The year 2017 strengthen this view. So as an investor it is really a decision to avoid momentum bargains with distance profits. Many people in investing also want everything NOW – Instant Gratification.
Events are like music on which markets dance… you need ears to decode this
Some events are for short term which makes markets dance like the GST or Gujrat Elections. Some events can be for long-term impact as they form decades to surface. Global war or border issues like Kashmir & Doklam are such issues. You can track events which are near you. But can you read minds on Trump, Putin or Modi?
At the end of the day, investing is and will remain challenging. As investors, we are influenced by emotions and biases that can stand in the way of our long-term goals.
It may seem foolish way to anyone who is not holding cryptocurrency or overpriced stocks right now. But the day will come when these will act like real assets . When that day will come is something nobody knows.
But the start of the new year 2018, a start of a new chapter … is probably a good time to take a look at what you can learn from what has gone last few months.
Key is to make sure these gains are temporary and that you will never get a chance to offset these once in a lifetime returns with future mistakes.
Wish you a Happy New Year 2018!!!
Regards
Madhupam
