Equity is one asset class of Investment that we dread. Out of approximately 1.4 Billion Indian, less than 4% are invested in Equities. Far lesser have tasted success in the World of Equity.
We yearn for safety in every sphere of life. Safety in our work life, personal life, investments that we do is uncompromised.
The risks associated with it makes us shudder. More so in the Investing journey, putting our hard earned money at risk is a road less travelled for us Indians.
Nevertheless, have we ever queried ourselves on the risk associated of not stepping out of our safe haven and exploring the other side of the spectrum?
Have we ever wondered what we stand to lose by not taking the plunge in to Equities (for long tenure)?
Are we willing to take this pathless path?
The populace was gung-ho on the Stock Market run up in 2007 when the BSE Sensex scaled to Life time highs to over 20k. The market was running on steroids and there was euphoria all around.
On the course of this run up, many had entered the market for the first time. No one wanted to miss the bus and wanted to make quick bucks.
Many had taken Loans and jumped in to the bandwagon. A perfect recipe for disaster.
More than anything else it was the greed that took control of things.
Running high on emotions is perhaps the worst thing that can happen to anyone who puts money in the stock market.
The Investment Guru, Warren Buffet once said ‘The Stock Market is a device of transferring money from the impatient to the patient’.
And the worst fear came true.
It all begun on Jan 21, 2008. Sensex (Stock Market Index) tanked by over 1,400 and all hell broke loose on sub-prime crisis in the United States.
Markets across the world took a beating. India was no exception to this.
All dreams came crashing down when as quickly as the Stock Markets zoomed, it collapsed to under 10k by the end of 2008. That’s a staggering loss of over 50% in less than a year.
Lakhs of Investor lost their hard earned money and never recovered even their principle invested amount.
The impatient left as quickly as they came. They never returned.
A similar sequence of events unfolded in Stock Market Crash of 2000 (dot-com bubble); 2004 when NDA govt. lost the general Assembly Election; 2020 when the Pandemic struck the entire world.
Great Come Back Trail
Market Crashes are a part and parcel of the Investment journey that an Investor goes through. Even though it causes a lot of distress to the one and all, what happens immediately the year following these crashes is something to write about and every soul should bear in mind.
A V-shaped recovery was in the offing. While 2008 went downhill, 2009 and 2010 took the other route. From the lows of 9,724, Sensex just took less than 2 years to recover all the lost ground and reclaims 21k mark in Nov’10.
Only if better sense has prevailed among the masses.
Similar story played out before us in the recent past.
In Jan’20, Sensex flew past 42k to settle at 42,273. Then the unthinkable happened. Pandemic struck the world a gap of 100 years.
And the carnage began.
In a span of just 2 months it plummeted almost 40% settling to the lows of 25,630.
Many saw this as the end of their Investing journey and were scared to death by the vagaries of Mr.Market.
On the other of the spectrum, a few wise souls stayed put. Never broke a sweat in all this mayhem.
Warren Buffet once said, ‘Be fearful when the other are greedy. Be greedy when others are fearful’.
And the patient folks were rewarded. As I write this blog, the Sensex more than doubled in 15 months and currently stands tall at levels of over 53k.
Having shared the above details, the question on everyone’s mind would surely be this, what really make the Best Equity Investor?
Will share an incident to reveal this quintessential quality.
The Quality of the Best Equity Investor
It was a fine morning at work for me when I happen to engage in a discussion with a Senior employee and my peers related to the work at hand. The discussion quickly drifted towards how the Market was behaving. However, the Senior Employee was disinterested in the discussion and seemed disconnected.
I was intrigued and edged her for her inputs. She happened to unintentionally reveal the most important quality of a successful Investor and this is what she said.
‘I don’t follow the market and leave to my husband to invest on my behalf in Equity Mutual funds. I have been investing since over a decade now and don’t bother on the vagaries of the Market.’
This simple thought struck me and I kept pondering over it.
In my investment journey of over a decade, I have never stayed put on anything longer than 3-4 years. This was a costly mistake. Have made mistakes which costs me heavily and learned the hard way to being a successful Investor.
I have no doubt on my mind that this lady who has stayed put in Equities for so long has been more successful than most Investors.
Simple things are the hardest to do.
The golden rule is this ‘Stay Invested for a long haul in to Equity Mutual Funds’. I failed to do this and have little doubt on my mind that I would have been far richer had I not churned my Portfolio so many times.
This makes me want to pull my hair off (not to say that I have a lot left). Thankfully, better sense prevailed in me and have since then been a patient Equity Investor.
The rewards have flown.
The Ideal Mindset of a Successful Investor
So, here it is. Let’s reveal the secret.
Market is up, ‘Stay Invested’, Market is down, ‘Stay Invested’. I bet my boots on it. Your money will Grow and you will be rich. Period.
Now, I point a finger straight at you and prod, do you have what it takes to imbibe this ideal quality?
I dare you to be successful in your Investing journey.
Loads of luck.