We meet a lot of investors who are emotional and still stuck with the golden era of stock markets which was between 2003 to 2008. Yes, that was a golden era where stocks rallied 1-2% daily. The annual returns from the stock markets were around 40-50%. Investors who invested in that period are still stuck with those ideas where they expect the current market also to behave on similar lines as it did between 2003-2008. For all those investors we would like to convey that, the next couple of years at least are not going to be like that. It is going to be completely different. The dynamics of the economy has totally changed, business has changed, policies and expectations have changed, growth parameters and earning volumes have changed. Every input parameter has changed and hence we think that, those times will not come back so easily. So please do not restrict yourself with fixed set of ideas. Be open for all set of new horizons. Don’t let your ideas become a barrier for you to invest and make money. It’s good that the fresh breed of investors do not have any notions about the golden era and hence they are un-biased. But they surely have to work a little harder and trade smartly.
One problem with all of us is that we want the markets to behave in a particular way. We do not want to adjust to the demands of the market. Somebody once truly said that, “The markets are always right. It’s we who are always wrong”. Remember that If we don’t restrict ourselves to any pre-conceived ideas as to how the markets must behave and if we think broadly, we should acknowledge the fact that the current market is very healthy. Definitely it’s not running away like it did between 2003-2008 but it’s not a bear market of 2008-2009. Stocks and Index has appreciated by 15-20%. They have outperformed gold, silver, real estate, commodities in terms of returns. Good stocks are not coming cheap. Corporate earnings have not come down despite high interest rates and several other challenges. The job market is also fairly even and stable. So this is not a bearish market. It’s just in a corrective mode and preparing itself for the next bull run. So this is the perfect environment for the markets to flourish. We just need to put our money on the right horses.
In the last couple of months, the markets have built up a lot of expectations on the government with respect to curbing inflation, policies, stabilizing oil prices etc. A lot of positives are expected post July 19th presidential elections. If these expectations are met, the market would gain a lot of strength. Good monsoon with some good corporate earnings would add further strength. A lot would depend on the government moves henceforth. Till then we would have a range-bound market. We will continue to follow are mantras and have a conservative and a stock specific approach. Even if we are not investing, somehow we need to continue to spend time in the markets. Remember, money made in the stock markets is directly proportional to the time spent in it.