Invest for the Long Haul

Quick edit:

An equity portfolio is like a garden. There always will be times like spring when it will shed most of what it has. That doesn’t stop it from reaching full bloom a short while later. Experiences tell you that the strain of shedding always leads to a search for relief. A walk in the garden in spring will see the gardeners working actively, cleaning up, tending to the weaker plants, applying manure, watering, and doing so many little acts of caring. Investing and gardening have a lot in common. Yet, investors often overlook the need to tend to investments. They mostly look at them only when it is bloom time or harvest season. Many even tend to them at that hour. As if miracles happen overnight? The time to tend is when there is a strain. This is a simple truth. But, investors either don’t understand gardening or are poor believers in the act of tending at the right time and waiting. It clearly is spring in the Indian stock market. The discerning investors are busy gardening their portfolios. They are tending to them, with the utmost care and giving them all that they need. The busy ones find the right gardeners and leave them to do the job. There is a time for everything. The one who understands this stands to see the best bloom in his garden. Happy investors are also those who know the art of gardening. They know when it’s spring. Their gardens are working overtime now. There will be a full bloom someday soon.

When investment ideas are aplenty, the method matters in making the right choices.

Invest speak:

When costs rise, they exert severe pressure on corporate profits. The earnings (EPS) tend to be pressured across the board and investors tend to believe that valuations are stretched. While the earnings outlook may look weak, the quality of earnings is actually better. Companies actively respond to cost pressures through cost-cutting, productivity improvement, and business transformation. Normally, these moves tend to bring benefits into the bottom line with a time lag. Importantly, when the overall outlook improves, the hard measures always deliver handsomely to earnings. We seem to be in a phase when these tough measures are being taken continuously.  Markets tend to take cognizance of future benefits much before they kick in. All the market needs are a few early indicators for evidence. The coming quarters will see the evidence trickle in.

Invest for the long haul. Run it like a marathon.

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