Relying on Robustness

Samvat 2079 was a very interesting one in many ways. It saw investor wealth surge significantly. It also saw performance in gold & silver. It saw a resurgence in demand for high-end real estate. Luxury consumption saw its best year in a long time. Such a strong year usually cannot be followed by an even better year.

Given the political uncertainty we are heading into, we could see tentativeness in Samvat 2080 that we had not seen in 2079. This tentativeness has no logic or reason, as it will be purely driven by sentiment and fear. Habitually greedy investors could turn irrationally fearful next year.

The period from this Diwali to the next one would be a very interesting phase for investing. The most unexpected places could be where the best investment prospects are hidden. The interesting point is that these unexpected places could turn out to be obvious. This would be in sharp contrast to what we experienced in the last year.

Last year, we saw returns coming out of places that were difficult to spot. We had the best opportunities hidden in microcap and small caps. From here, an investor should look for opportunities among the obvious – leaders in their industries, sectors that have secular growth opportunities, and managements that can be trusted for the long term. Investors must learn to stay invested in robust quality-driven enterprises in the year ahead.