The Indian investor was once identified with conservatism and savvy. He would always buy when assets sold low. He stayed out of bubbles. Gold was bought in small parcels when prices were attractive. Fixed income was a steady part of his investment book. He ventured into realty only when he felt the prices weren’t over done. He bought quality equity steadily when they sold low. He rarely speculated. Call it the Eighties’ investing. Today’s investor is a bubble hunter. He wants to be where the action is. Repeatedly, the investor has allowed greed and hype to dominate the mind. Investing has repeatedly failed for this good reason. Today, the hype stands busted in gold & equity. Realty waits to be busted. There can be no better time to return to the basics. The mind has to dominate fear and panic today. Only then, it will dominate greed and hype some day in the future.
Investment conviction about a bright tomorrow has to come today. It doesn’t work any other way.
Investors have increasingly turned bubble chasers. The results have only been too predictable as investors have lost heavily in stocks and gold. The outcome in realty will be no different. When investors lose in one bubble after another, how will they react? Will they shun investing in risk assets and stick to bank deposits? Given the low interest scenario emerging, it is not a bright idea in the long term. With high inflation, real returns can be generated only buying risk assets. The trouble is investors shy away from risk assets like stocks and gold when they sell cheap. Investors tend to further panic when these assets get cheaper. Buying cheap is the panacea to most ills of investing. When high quality stocks sell cheap, investors must buy and put them away. It is a great time to correct behavioural weaknesses in your investing. If you want to be an intelligent investor, you must begin somewhere. We think that it is a good time now.
Great valuations vs bad macros – a leap of faith is the need of the hour.