Widely read:
Dhirendra Kumar's Editor's Note on how a blend of cautious optimism and long-term vision sets true equity investors apart received significant feedback from readers. The thoughtful responses underscored the importance and relevance of the topic. As a gesture of appreciation, we dedicate this section to our valued readers, whose insights help enrich these discussions.
Summary
Equity investors are eternal optimists, mixed with some caution. Our fundamental belief is not in blind positivity but in resilience, growth, and progress. With unwavering conviction, we understand that the future holds more promise than the past. Even in the darkest times, when markets falter and economies stutter, the underlying trend has always been growth.
Businesses adapt, innovate, and ultimately generate more wealth than before. We experience years of exuberant growth followed by sobering corrections. 2020 may prove less fruitful than 2019, and 2025 might face unforeseen challenges. Yet, zoom out, and the picture becomes clearer. With the utmost confidence, 2034 will be better than 2024, just as 2023 far surpassed the dark days of 2013.
This belief transcends mere numbers on a balance sheet or fluctuations in a stock index. Take away the financial models and economic theories, and you'll find this simple yet powerful belief at the heart of long-term investing. It's not about predicting every market movement or timing every trade perfectly. Instead, it's about recognising the underlying current of progress and positioning ourselves to ride that wave over decades, not just quarters.
This optimism doesn't blind us to risks or dismiss short-term challenges. It gives us the resilience to weather storms, knowing that calmer, more prosperous seas are beyond the tempest. This balance of cautious optimism and long-term vision defines the true equity investor, separating us from mere speculators or short-term traders.
Stock investing can be complex, but the path of progress may wind and occasionally double back. Still, its general direction is forward. In choosing to invest, we become part of the same growth that will generate returns for our investments - it's a virtuous, self-reinforcing cycle.
We believe, as optimists, that there will be growth and more prosperity. Based on that, we have to choose the best investments that can benefit from it. Investors who feel that investing is about predicting EPS and GDP have a different set of problems. People like us need faith that the world will grow and a rough sense of which companies are well-run. That's enough.
What our readers say
Nandkumar J: At the outset, season's greetings, and I know you are trying to remain positive while expressing pessimism about new retail investor behaviours.
All those experts who are called upon to provide their opinions are those who have been very successful investors with over 15 years of experience and have amassed enough wealth. In their interviews, all admitted that they have made mistakes, and the great Warren Buffett also admits he has made them. That is the real beauty of this equity investment game— that you learn to be patient and remain invested for a long time only if you have made mistakes. Such an experience makes you a better investor.
I, too, belong to the old school of thought as I have seen the worst period of 2008 and 2013 and the mid-cap crisis of 2018. The new retail investors have seen only a bull run from 2020 and no deep correction. The majority of them are intelligent investors and have already earned a lot/created a lot of wealth. Hence, they can live to see another correction and become even stronger, helping to grow their confidence in Indian equity markets. There will be those who will do panic selling, but they will return to play well. But like the GDP index, our retail base will continue to grow. This is because, for India's growth, the sky's the limit. And that is because India is still a developing country.
Sanjay Kulkarni: Yes, I fully agree with your views. If statistics/data analysis could accurately predict the future (market and companies), then it would be so simple to invest, and anybody and everybody would follow this.
But the fact is, it's not possible, which then brings a whole lot of excitement (nervousness) and enthusiasm to this exercise.
I think the same is equally true about all other aspects of life. So, let's play this game with the best of your wisdom and conviction and hope for the best.
Annamalai Rajan: Wonderful note at the need of the hour. We should understand that our heartbeat has always had ups and downs AND should not be a straight line.
Ananth P V: This is one of the best messages I have read this year. Thank you.
Krishnamurthy Muralitharan: Very well-written and valuable advice. In short, your recommendation of staying invested over a long period is a golden one. Personally, I have been investing since 1993 (actively from 2002) and even though my portfolio went through many ups and downs it has returned me a CAGR of 18 per cent which is more than decent. Keep writing. All your advice is truly sincere and not biassed in any way.
Tridivesh Gupta: I fully agree with your views. It is futile to be an investor unless we have a firm belief in our nation's future growth story. We have to stay invested without worrying about short-term blips in the market due to geopolitical or any other reasons.
Krishnan Vedant: Brilliant. Simply brilliant. I've been your reader for the last 20 years, and this is by far the best. Keep up the good work. Here's hoping to read many such stimulating writings on equities.
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