Revisit your idea of risk.
The Indian parliament has sat for the least hours in 2013. Sad, isn’t it? But, in the year that Parliament failed to have its usual sessions, it has actually transacted the most important and pending business in recent history. So, FDI in retail, Lokpal and several important legislations are a reality today. With bills passed and legislation taking effect in early 2014, we could well see the birth of a very different India. A country which looks forward to a new era of growth. We will see much more business getting transacted next year – the new companies act & GST are some other big ideas with bills in the making. These bills will change the course of our economy and our economic future will look very different once these two bills are a reality. Come 2014, we know what to look for from Parliament. This parliament is still in with a fair chance and we should not write it off yet.
The best of opportunity takes birth in the worst of times.
So, how did asset classes deliver in 2013? Equity has actually not done badly. Markets gave modest returns. Debt investing had a terrible year as interest rates went down a bit in the first half only to soar in the second half. Real estate has seen buoyancy in prices not matched by demand impetus. But, the worst performer in 2013 is gold. In dollar terms, it lost 30%. In rupee terms, we are staring at a 7% loss. But this loss could be worse (17% ) if we factored the import duty of 10% imposed by the government. Gold has ended up as the worst performing asset class of 2013. Now, that is a complete reversal of its performance from the earlier years. If you are looking at relative performance, gold has been a complete disappointment for investors. Looking ahead, the withdrawal of QE in the USA and the import duty by the Indian government present grave risks to gold investing in 2014. So, investors need to re-look at their notions of risk when it comes to gold.
Avoid gold. Difficult days ahead.