Look before you leap

Please switch off the power to the computer and then turn it on again.

That's the time-tested advice that any computer-support tech gives on the phone if you tell them that you have a dead computer that will not come on. They do that not because this can fix the problem but because often the problem is simply that the power switch is off. If they tell users to check if the power is on, they might get offended at being told such an obvious thing. And then, they might just say that they have done it without actually having done so.

If you think about it, much of what a good financial advisor should say boils down to this obvious advice in some new garb. The need for a new way of saying the same old things is unfortunate but necessary. The human mind needs something new, but good, sensible personal-financial advice rarely changes.

Back in mid-2020, when coronavirus was at its peak, I wrote the following in my column in 'The Economic Times': Some of my readers say that ever since the Covid crisis started, I've been guilty of repeating the mantra 'stick to the basics too often'. They are completely wrong. I have been repeating this mantra for the last twenty-five years; Covid has nothing to do with it! I hope to keep repeating it for decades to come. And, more importantly, beyond just me writing and you reading about it, I hope that all of us will continue to practise it in our investing.

Our cover story of 'Mutual Fund Insight' January 2023 issue faces the same problem. I need to get you to buy and read this magazine. That's the business. Without that, my team and I will have to close Value Research and maybe start a restaurant, shoe shop or something. However, I have nothing new to offer you regarding fundamental advice or principles.

Of course, there are new funds and new types of funds and new AMCs and so on. You need to know about those and read our analyses, and telling you all that is very much a part of what this magazine is all about. However, in terms of fundamental principles, there is nothing new under the sun. The markets are at an all-time high. The headlines are screaming about how much money is being made, and there is an atmosphere of 'must act now' on those parts of social media where traders and market professionals hang out. However, this is an extremely misleading idea, especially for mutual fund investors.

For most people, very little should be done at the market peaks. The whys and hows of this are explained in detail in our cover story of 'Mutual Fund Insight' January 2023 issue. As you will read, the few things that might (might) be needed are essential and need to be done carefully and systematically.

The current 'tezi' in the Indian markets carries an apparent paradox. Historically, trends that surface in the western equity markets replicate in the Indian markets within a few months. However, this happened in 2022. The US markets were in the doldrums from late July till late October. It was quite a sharp decline. Moreover, American tech stocks, the larger FAANGs and smaller ones, faced particularly steep crashes. Somehow, India passed unscathed through this for the first time in decades. There are many reasons for this decoupling (that's a word that had gone out of fashion) and we'll discuss them another time.

This is good news, but it puts a greater responsibility upon investors and analysts. If a market is independent of global trends - even sometimes - then we need to make a greater effort to understand what's happening and how we should conduct ourselves.

Suggested read: Facts change, principles don't