It is not always a smooth ride

The last few years have witnessed heightened activity in the investment world. All asset classes performed, be it equities, gold, private equity, private debt and real estate. Even Bitcoin did well. The party lasted a long time, and many new investors were enticed into the investing world. Several commentaries suggested that retail flows brought resilience to the market, justifying higher multiples due to lower volatility. In short, there was a FOMO, and everyone wanted to jump in. But mean reversion is as real as it gets. Warnings about excesses were ignored, and cautious investors were often belittled for being conservative. As Mark Twain aptly said, "History doesn't repeat itself, but it often rhymes." The risks were evident to some, but few could resist the strong tides. Suddenly, a few factors started to play out. FIIs (foreign institutional investors) took flight once the US yields began to rise, and elections took a toll on public spending. A visible slowdown in

This article was originally published on February 15, 2025.