This Time It’s Different ?!

This Time It’s Different ?!

Markets are hovering near an all-time high. So, is it time to be cautious? Or This Time, It’s different.

I came across this in the wrap newsletter by Tariq Hussain

Attaching the snapshot below.

So, have we peaked out? Or This Time It’s Different [TTID]

Well, why is it different this time?

Because India is in a secular growth phase, it has one of the highest GDP growth. There are various factors to consider. ( Attaching only a few links to avoid making a huge post)

Growing Indian Economy

India economic outlook, January 2024

India’s Growth to Remain Resilient Despite Global Challenges

Demographic Dividend

India@100: reaping the demographic dividend

India’s Demographic Dividend: The Key to Unlocking Its Global Ambitions.

Government’s Capital Expenditure

Expenditure of Government of India

Budget 2024: Infrastructure – Government likely to continue capex push

37.4% increase in capital expenditure to 10 lakh crore in be 2023-24

Private Capex

GDP numbers suggest private capex gaining steam, say experts, CFO News, ETCFO

Private sector will have equal or greater participation in overall capex – Market News | The Financial Express

Financialisation of Savings

The big shift in financialisation | CRISIL

The evolution of financial services and savings trends in India | Mint

China +1 Theme

India Better Positioned to Navigate Global Headwinds Than Other Major Emerging Economies: New World Bank Report

India Big Beneficiary As Companies Move Towards “China Plus One” Strategy

Should India be Your China Plus One? – India Briefing News

Renewable Energy & Green Hydrogen

India’s energy independence by 2047 a certainty!

Hydrogen Overview | Ministry of New and Renewable Energy | India.

India | Green Hydrogen Organisation

I can add a few more points to this list. But as of now, this much is fine.

So is it different this time?

Here is one of Benjamin Graham’s Quote

Along the same lines, while Indian stock markets have done very well over the years, Indian retail investors have not benefited as much.

While there are many reasons behind it, the difference primarily comes from investors trying to time the market. Buying when the market is at an all-time high and selling when it falls is the most significant factor affecting investor returns. The other apparent reason is that people don’t invest in mutual funds for LONG TERM. 1

Let’s summarise the biases that are at play right now.

Among the many, Recency Bias and Herd Mentality are the main biases. On top of that, Authority Bias is also at its peak. It’s time to control your Action Bias and FOMO, aka Fear Of Missing Out.

I am also as confused as others about – How to play in this kind of market.

What are the possible solutions to this dilemma?

• Wait on the sidelines, and don’t put any fresh capital now.

• Avoid social media noise and all the trending hot sector stocks.

• Do profit booking in richly valued and borrowed conviction ideas. But keep holding your own conviction ideas ( or even add if you are comfortable with the valuations) which are in your Circle of Competence.

• Go back and re-apply your checklist to all the current holdings. And prune the low-quality business that may have entered your portfolio ( due to the Euphoria of the Bull Market ).

• Remember to maintain an investment diary where you can jot down your thoughts and ideas to gain clarity of mind. Writing down your thoughts can help you make better investment decisions.

But the simplest solution is – ‘ Just Keep SIPing…’. Just continue your SIPs for the long term.

dr.vikas

P.S. I just wanted to quickly mention that what I’m saying are my own personal views. And to be honest, I have no idea how the future is going to unfold.

1 – You may not be earning as much as your fund is | Value Research.