Investing in 2016
New Year Wishes!
At the end of a long, tiring, uneventful year for equities, it is again the time to be predicting the next. Here is a caveat. Nobody has a crystal ball. Nor, is anyone truly clairvoyant. Then, why predict? It is not even the job of an investor. The advisor’s job is far more complicated than investing. An advisor needs to keep investors in the hunt for investment success. To achieve that, he needs to help an investor set his expectations right. A prediction is merely a tool to fix the expectations right. Investors who set the right expectations would do all the right things. So, here we go.
So what did we say in 2015? We hadn’t promised much. Here is what we said. (Investing in 2015). Actually, we had exhorted investors to set their expectations low. We went against the market consensus. Just to remind you, the consensus view for 2015 was overly bullish. Our view put realism into our investors. This helped them invest aggressively as markets fell in 2015.
2016 holds much more promise than 2015. We have reasons to think the year 2016 will end much stronger than where it begins. We expect the flows, of news and funds, to improve as the year 2016 progresses. The economy will deliver a decisive movement and break-free from the current state of flux. A recovery would be far more visible. Investor conviction will rise in 2016. Investment alternatives to equity will progressively weaken. Interest rates will marginally drop further. Real estate won’t find enough demand to match supply. And, gold will struggle against rising US interest rates. Equity will be viewed as a relatively, superior asset class.
2016 will see a paradigm shift in expectation- performance equation. Market expectations will drop drastically while corporate earnings will recover consistently. This will make INDIA an attractive destination in 2016. FII’s could well reverse their stance towards Indian equities in 2016. They can turn buyers of Indian equity as the year progresses.
The long and short –
Believe in equity.
Buy more equity.
Don’t wait too long to buy.
Raise equity exposure.
The markets won’t wait for you.
Be ahead of the markets.
Stay ahead of the herd.
Staying in the hunt longer than everybody else would be the success mantra in an economic recovery. The game is all about patience. Patience makes wealth too.