Strategy > Tactics
Expectations can change much faster than we think. Consider this. In 2008, everybody who was a stock market participant genuinely believed their stocks could not go down. In 2009, nobody wanted to buy shares because there was consensus that stocks would go nowhere. In January 2016, nobody wanted to bet on stocks. The consensus actually believed that the eight year stock market cycle was over. Few people believed that the markets would end 2016 at a level higher than where it began the year. We could see a positive surprise there.Now, post Brexit, the consensus view seems to think that the only place to make money in the stock markets is in small cap stocks. The markets seem to be in the mood to swiftly put behind every kind of bad news. From experience, we know one thing for sure. Consensus is a bad thing in stock markets. It has a history of negative correlation to performance. So, investors must be conscious of where the herd is forming and gradually move away to a safer place. Equity investing will always be about choices. While the markets could still give high returns in the coming 24 months, the pack of performers could change dramatically. An investor must be diligent in his quest for returns even as he maintains his strong belief in equity as an asset class. That is hardly going to be easy.
“Success is 20% skills and 80% strategy.”- Jim Rohn.