Getting bitten by markets

I recently tweeted on X (Twitter). Or should I say microblogged? Honestly, I'm still not sure what the right term is after the name change. But anyway, I'm on X, a paying member at that, and I still tweet—because I'm certainly not going to say I was "X-ing".

Here is the tweet:

"If your portfolio is down 30 per cent right now, it was never a portfolio; it was a list of stocks that you thought were good picks for some reason or a list of your favourite stocks...".

Oh man, the amount of blowback I got was unexpected—and unusually abrasive. I had to post an immediate clarification:

"It's not come out correctly—my apologies. Basically, I meet a lot of investors who create a list of stocks that are to their liking. If it goes up when the market goes up and falls with the market or more than the market, it's a concern. I was trying to say portfolio construction is scientific effort to beat some benchmarks and has some risk/return/standard deviation, etc., outcomes to be accounted for. Even SEBI has now told all of us to disclose information ratio for the same purpose."

And another one:

"The previous tweet on the portfolio hasn't been expressed as intended. My apologies. Don't jump to conclusions, bhai. I spend 15 days on the road doing meetings, public speaking, small group and 1x1 interactions with clients (direct, PMS, AIF, MF), investment advisors, wealth managers, distributors, private bankers, et al. There's a small possibility I know what's happening outside, in 'portfolios'."

The market's bite feels real

But in the process, I learnt that the backlash wasn't just about what I said—it was about the pain investors are feeling. There are people who invest directly in equities and are more than 30 per cent down from the peak in 2024. My tweet was seen as 'insensitive' and 'inappropriately timed'!

I set the bar at 30 per cent because, as of mid-February 2025, the worst-performing benchmarks—BSE Utilities TRI and NSE India Defence TRI—were down around 29 per cent from their 52-week highs.

To put that in perspective, Tata Power, one of the hot stocks of the last 3-4 years, is down 31 per cent from its 52-week high. NTPC has fallen about 30 per cent at the time of writing. Even the best-pedigreed individual stocks with stellar past returns and heavy retail ownership have fallen more than the index. The Defence and PSU indices are in a similar drop range, but some of their hot stocks have fared even worse. HAL and Cochin Shipyard are down 41 per cent and 55 per cent, respectively.

The rise of DIY investing

Over the past 3-4 years, demat and brokerage account openings have outpaced even SIPs. In fact, industry experience shows that SIPs per investor might be anywhere from two to six, while demat accounts might be more like one to three in outlier cases. Yet, the number of demat accounts has more than doubled the number of SIP folios.

It became too easy to buy and sell stocks and dissing mutual funds as a slower or lazy alternative—unnecessarily holding a bunch of stocks benchmarked to an index and holding many businesses that were not in play. After all, the middle class was dying; the focus was moving from returns on labour to returns on capital, and we were supposed to industrialise in five years.

That may well be eventually, I don't know. But nothing happens in a straight line, and markets are perpetually in relative value-seeking and mean reversion mode.

Between 2021 and 2024, I even had clients bring their 25-year-old kids to meetings, proudly saying, "My son is doing better than you". Some even pulled money out of mutual funds to invest directly in stocks.

Mutual funds: The lesser evil?

The average mutual fund is down 10-20 per cent, depending on its category—large cap, flexi cap, mid cap, small cap or multi cap. Some outliers are worse off, like the ones replicating one of the badly hit narrow benchmarks cited above.

The thing about owning stocks is that unless you are truly a deep researcher and a contrarian at heart (both being necessary but not sufficient), you will most likely end up owning what's hot in the markets. Markets, by nature, blow hot and cold. So what's hot will eventually be cold, and what's cold will eventually be hot without a warning.

Markets will scald you. They'll give you frostbite. What starts off feeling like a love bite can quickly turn into just a bite without love.

There's nothing good about losing money—whether it's more or less than others. Outperformance offers little solace.

But if there's one lesson from this fall, it's this: mutual funds are the way to go when it comes to investing in equity markets.

It's okay if the market doesn't give you love bites as long as it doesn't leave frostbite and permanent scars on your ability to invest again.

Aashish P Somaiyaa spearheads WhiteOak Capital Asset Management Limited as their CEO.

Also read: Why catching alpha in the US feels like chasing unicorns