At the beginning of 2012, we were of the view that equities were very attractively priced. The bad news was mostly factored in. The good news wasn’t. This was a classic buy signal and we said so. The markets have performed very decently throughout 2012. Sadly, domestic investors refused to participate. This brings us to the question. Have investors really learnt anything from their past mistakes? Do investors want to reinvent their equity investing and make equities deliver for them? Not really. Investors mostly believe that they can create wealth without buying equities and they think timing does not matter for other asset classes like realty and gold. There can be no greater folly that this belief. And, investors are set to pay the price for their misplaced beliefs on the cyclicality of asset prices. 2013 will be the early phase of under-performance by gold and realty. The subsequent years will probably be worse. Investors haven’t learnt to place their faith on the right beliefs. Worse still, they believe strongly in the wrong. We shudder to think of the consequences. Equity will consolidate slowly in 2013. The opportunity window remains open for those who want some fresh air.
Time doesn’t alter the value of your investments. Perception does.
Multi bagging is every investors dream. Yet, those who actually achieve to land multibaggers are a handful. Why is multi bagging so rare among investors? Multi bagging is rare because the number of genuine seekers are low. The home truth about multi bagging is that it doesn’t happen over shorter time spans. Multi bagging happens mostly over longer time spans. You are more likely to achieve multi baggers in the same stocks if you hold them for 6 to 10 years. The same stock may go nowhere if you held them for one or two years. To make the right choice of stocks and to turn them into multibaggers, every investor needs an investment process. Without a process, investors can’t hope to make multi bagging a habit. Investors who wait for the perfect moment to invest are the ones who have no process in place. Even buying early can be remedied by buying more. Your process can take care of those worries. But, waiting for too long has no remedy. Investors who wait too long for the perfect moment mostly end up passing several multibaggers over.
Before sentiment recovers, your confidence needs to grow.