The Great Indian Political Show vs Your Portfolio

Millions of Indian and Global investors have been shaken due to the political winds of change in the recent Lok Sabha Elections. Understandably - it’s not easy to see 3-13% fluctuations in your portfolio in a single day. It’s enough to give anybody the heebie-jeebies. In addition to this, many of our newer investors who have entered the market during the 2020 Covid waves - are experiencing this shock for the first time ever.?

Is this just the start? Is there more pain a coming? Should I hold? Should I buy more? Should I exit? Investment is a field where action is easy, but reaching the right conclusion in the right way to act is extremely tough. In addition, action is not always the right thing - inaction or patience is often the right answer, given your research, rational and reasons are correct.?

Here are some principles that will stand you in good stead as you endeavour to answer these questions:?

1) Guarantee Void: Post election results made the markets shake with the guarantee being questioned by parts of India the first time in a decade. However do not forget, we have a? single party who has seat equivalent to the opposition, whose alliance partners stand to benefit from supporting it in the medium term. Political stability is shaken but not stirred!?

2) Keep Calm and Carry On: Mr.Market is a bi-polar personality. Sometimes they are supper optimistic and consider that nothing can go wrong, on other days they act as if the world has come to an end and we are all doomed. The truth often lies in between, as is the case here. Sure some sectors may not be as attractive post election as they were pre election, but does that really matter if you are planning to be invested for the next decade? Likely not! So take the fluctuation with a pinch of salt, and rationally assess as you should do every quarter on the potential sectoral Opportunities and risks.?

“The stock market is a device for transferring money from the impatient to the patient.” Warren Buffet

3) Its the Ocean, not waves: we as humans are prone to recency bias, which means the more recent the event, the more importance we ascribe to it. However this is often not the case. The most important event could be one that happened years ago, like the GST tax reform in the case of Indian markets, or the demographic dividend that began a decade ago! So ignore the froth that comes with the waves and look for value and opportunities that the ocean gives you. Rides the waves if you will, but eventually it’s the ocean that’s going to make you rich!?

“Time is the friend of the wonderful business, the enemy of the mediocre.” Warren Buffett - Letter to Shareholders 1989

4) The Great Indian Juggernaut..wont fly by itself: The steam in the growing Indian economy is not exhausted. However that doesn’t guarantee a positive investment outcome. Investment opportunities are created top down economically, but captured bottoms-up on specific players, industries and consumption trends. For eg: the US economy and markets did very well from 1950-2015, but if you saw that and invested in the Airline Industry, you would have lost your shirt. So keep your eyes open, work with the best people in the industry or dedicate yourself to deep research, create data based conviction, keep your adrenaline low (look for the boring, not the exciting) and take cautious bets when investing.?

Happy outcomes and see you on the other side of the puddle in a few months!?And meanwhile if you need a solid research team to help you improve your performance and lower investment risk,we are here to help!