Investment Lessons from 2024 India Elections

This was a hard-fought battle for all the political parties. During last three months parties did everything to win the election, All types of tricks n tutkas, strategies n styles were used,  money was spent like water and at times canvassing was like a do-or-die situation

At the end of all this, the result came and BJP won 240 seats but was still considered as a loser.

While Congress won less than 100 seats, but called as a star performer.

A few Money lessons we can learn from this interesting election are:

 1. Never take yourself for granted (Falling BJP Tally)

Even if you are the best, keep on improving. In investment also don’t assume that once the investment is done then it is going to be the best performer. Similarly, we need to keep on improving our investment skills as well as review the portfolio regularly to get the best out of it.

 2. Learn from the failure, keep on trying and never give up (Congress Performance)

In the previous two elections, the performance of Congress was very poor, but they didn’t give up and kept on trying (Bharat Jodo yatra, Nyaya yatra, etc.). And this time they got almost 100% more seats than their previous tally.  So even if we lose on our investments, we should try to find mistakes, have patience, and never give up to get better results.

3. There will always be factors beyond our control (Ayodhya: cast, religion & etc.)

Whether election or market, many factors are not in our control but have a very critical role in the outcome. So, no matter how hard we try, we cannot change certain things and have to accept it gracefully. Similarly, in investment factors like the Economy, Geopolitics, inflation etc. are beyond our control and have to accept their impact.

4. Regardless of credibility, name & fame we can be defeated by seemingly unknown forces (Amethi)

Amethi showed it twice, first Rahul Gandhi and this time Smriti Irani. It teaches us that even if we invest in the best of the companies or asset class, sometimes it may not give us a desired result. However, it does not mean to give up (Smriti Irani lost in 2014 before winning in 2019) but be ready to accept the poor performance from the best investments (companies) also.

 5. If you are fighting a tough battle, collaborate with people (N.D.A Vs I.N.D.I.A.) 

UP, Maharashtra are living example of the good results from I.N.D.I.A., similarly, Bihar and Andhra Pradesh is for NDA. They did it by finding right alliance partners. Similarly, in investments also even the best assets do not give the highest returns all the time and hence we need to do asset allocation. There are complimentary forces/assets, which if combined smartly can give better results than a single party/asset.

 6. We can get 100% strike rate if play smartly (LJP in Bihar, Janasena Party in Andhra Pradesh)

Chirag Paswan’s LJP in Bihar won all the five Lok Sabha seats it contested. Similarly, Janasena Party chief and actor Pawan Kalyan has scripted history after his party won all 21 Assembly seats and two Lok Sabha seats it contested with 100 per cent strike rate. That shows if we concentrate our strength and focus on a few places we can get better results rather than trying everywhere. Focussed investment with limited diversification can give better results than over-diversification.

7. Time Changes so our strategy should also change (use of technology and social media)

We need to be flexible, and ready to change our strategy as per the time and situation. We saw leaders changing strategies, using social media and modern artificial intelligence-based technologies etc during the elections. They delivered their speeches based on the local inputs, location and audience etc. Similarly for investments also we need to look at latest options and change the strategies based on time, goals, economic situations etc.

Whether elections or investments we should be ready for uncertainties and surprises, but rather than getting depressed from it, we need to learn from the mistakes and try to do better next time. Taking the guidance of experts always helps to improve our performance and we should use it for our benefit.

भारत के 2024 चुनावों से निवेश सबक

यह सभी राजनीतिक दलों के लिए एक कठिन लड़ाई थी। पिछले तीन महीनों के दौरान पार्टियों ने चुनाव जीतने के लिए हर संभव कोशिश की, हर तरह के हथकंडे, टुटके, रणनीति और शैली का इस्तेमाल किया गया, पैसा पानी की तरह बहाया गया और कई बार प्रचार के लिए करो या मरो जैसी स्थिति बन गई।

इन सब के अंत में नतीजा आया और बीजेपी 240 सीट जीती लेकिन फिर भी उसे हारा हुआ ही माना गया।

जबकि कांग्रेस 100 से कम सीटें जीत कर भी स्टार परफॉर्मर बनीं।

इस दिलचस्प चुनाव से हम निवेश के बारे में कुछ सबक सीख सकते हैं:

1. अपने आप को कभी भी हल्के में न लें (बीजेपी की गिरती संख्या)

भले ही आप सर्वश्रेष्ठ हों, सुधार करते रहें। निवेश में यह न सोचें कि एक बार निवेश हो गया तो सबसे अच्छा प्रदर्शन करने वाला होगा। हमें अपने कौशल में सुधार जारी रखने के साथ-साथ पोर्टफोलियो से सर्वोत्तम लाभ प्राप्त करने के लिए नियमित रूप से समीक्षा करने की आवश्यकता है।

2. असफलता से सीखें, प्रयास करते रहें और कभी हार न मानें (कांग्रेस प्रदर्शन)

पिछले दो चुनावों में कांग्रेस का प्रदर्शन बहुत खराब रहा, लेकिन उन्होंने हार नहीं मानी और प्रयास करते रहे (भारत जोड़ो यात्रा, न्याय यात्रा आदि)। और इस बार उन्हें पिछली बार की तुलना में लगभग 100% अधिक सीटें मिलीं।  इसलिए यदि हम कभी-कभी असफल भी होते हैं, तो भी हमें गलतियाँ ढूँढ़ने का प्रयास करना चाहिए, धैर्य रखना चाहिए और बेहतर परिणाम प्राप्त करने के लिए कभी हार नहीं माननी चाहिए।

3. हमेशा ऐसे कारक होंगे जो हमारे नियंत्रण से परे होंगे (अयोध्या: जाति, धर्म और आदि, इत्यादि)

चुनाव हो या बाज़ार, कई कारक हमारे नियंत्रण में नहीं होते लेकिन नतीजों में उनकी बहुत अहम भूमिका होती है। इसलिए, चाहे हम कितनी भी कोशिश कर लें, हम कुछ चीज़ों को बदल नहीं सकते और उन्हें शालीनता से स्वीकार करना होगा। इसी तरह, निवेश में अर्थव्यवस्था, वैश्विक-राजनीति, मुद्रास्फीति आदि जैसे कारक हमारे नियंत्रण से बाहर हैं और उनके प्रभाव को स्वीकार करना होगा।

4. विश्वसनीयता, नाम और प्रसिद्धि के बावजूद हमें अज्ञात ताकतों द्वारा हराया जा सकता है (अमेठी)

अमेठी ने इसे दो बार दिखाया, पहले राहुल गांधी और इस बार स्मृति ईरानी। यह हमें सिखाता है कि भले ही हम सर्वोत्तम कंपनियों या परिसंपत्ति वर्ग में निवेश करते हैं, कभी-कभी यह हमें वांछित परिणाम नहीं देता। हालाँकि, इसका मतलब हार मानना ​​नहीं है (स्मृति ईरानी 2019 में जीतने से पहले 2014 में हार गयी थी) बल्कि सर्वश्रेष्ठ निवेश (कंपनियों) के खराब प्रदर्शन को भी स्वीकार करने के लिए तैयार रहें।

5. यदि आप कठिन लड़ाई लड़ रहे हैं, तो लोगों का सहयोग लें (N.D.A बनाम I.N.D.I.A.)

यूपी, महाराष्ट्र I.N.D.I.A के अच्छे नतीजों का जीता जागता उदाहरण हैं, इसी तरह, बिहार और आंध्र प्रदेश NDA के लिए हैं, ऐसा उन्होंने सही गठबंधन साझेदार ढूंढकर किया। इसी तरह, निवेश में भी सबसे अच्छी संपत्ति भी हर समय उच्चतम रिटर्न नहीं देती है और इसलिए हमें परिसंपत्ति आवंटन करने की आवश्यकता है। ऐसी पूरक ताकतें/संपत्तियां हैं, जिन्हें अगर चतुराई से जोड़ा जाए तो वे किसी एक पार्टी/संपत्ति से बेहतर परिणाम दे सकती हैं।  

6.  अगर समझदारी से खेला जाए तो हम 100% स्ट्राइक रेट भी पा सकते हैं (बिहार में एलजेपी, आंध्र प्रदेश में जनसेना पार्टी)

बिहार में चिराग पासवान की एलजेपी ने उन सभी पांच लोकसभा सीटों पर जीत हासिल की, जिन पर उसने चुनाव लड़ा था। इसी तरह, जनसेना पार्टी के प्रमुख और अभिनेता पवन कल्याण और उनकी पार्टी ने आंध्र प्रदेश में सभी 21 विधानसभा सीटों और दो लोकसभा सीटों पर 100 प्रतिशत स्ट्राइक रेट के साथ जीत हासिल करके इतिहास रचा है। इससे पता चलता है कि अगर हम अपनी ताकत केंद्रित करें और हर जगह कोशिश करने के बजाय कुछ जगहों पर ध्यान केंद्रित करें तो बेहतर परिणाम प्राप्त कर सकते हैं। सीमित विविधीकरण के साथ केंद्रित निवेश अति-विविधीकरण की तुलना में बेहतर परिणाम दे सकता है।

7. समय बदलता है इसलिए हमारी रणनीति भी बदलनी चाहिए (तकनीक और सोशल मीडिया का उपयोग)

हमें लचीला होना होगा और समय और परिस्थिति के अनुसार अपनी रणनीति बदलने के लिए तैयार रहना होगा। हमने चुनावों के दौरान नेताओं को रणनीति बदलते, सोशल मीडिया और आधुनिक कृत्रिम बुद्धिमत्ता-आधारित प्रौद्योगिकियों आदि का उपयोग करते देखा। उन्होंने स्थानीय मुद्ददो, स्थान और दर्शकों आदि के आधार पर अपने भाषण दिए। इसी तरह निवेश के लिए भी हमें नवीनतम विकल्पों को चुनने और समय, लक्ष्य, आर्थिक स्थितियों आदि के आधार पर रणनीतियों को बदलने की जरूरत है।

चाहे चुनाव हो या निवेश हमें अनिश्चितताओं और आश्चर्यों के लिए तैयार रहना चाहिए, लेकिन इससे निराश होने के बजाय हमें गलतियों से सीखना चाहिए और अगली बार बेहतर करने का प्रयास करना चाहिए। विशेषज्ञों की सहायता लेने से हमेशा हमारे प्रदर्शन को बेहतर बनाने में मदद मिलती है और हमें इसका उपयोग अपने लाभ के लिए करना चाहिए।

Lessons to be learnt from the Indian Election 2019

Congratulations to everyone.....

World's largest festival of democracy is over & strongest statesman of the world is at center again- So let’s find out what we can learn from this biggest democratic festival of the word’s

1. When it's about nation: Support the Nation.

2. When it's about army: Support Soldiers, they fight unconditionally.

3. When so many social schemes are on ground: don't say "Kya Kiya".

4. When institutions are working, to hide your inefficiencies: don't blame them.

5. Every success has a very hard work in the back ground. Don’t fall prey in short cuts.

6. A proper machinery, man power, planning and other resources are required. You can’t get a success without all these basics.

7. When democracy is prevailing: don't spoil image of nation on foreign soil.

8. When secularism is prevailing: don't coin word intolerance to appease communities.

9. When nation is rated as emerging global powers: don't say it's fudged analysis by rating agencies.

10. When leader is working with integrity: don't say he is corrupt without any concrete evidence.

11. When positivity prevails: don't spoil your image by talking or supporting negatives.

12. When victory is inevitable: respect the verdict unconditionally.

13. When in debate a friend gets annoyed: wait patiently, better sense will prevail, than leaving him.

14. When some sensitive topic about the history is being discussed, don’t talk casually “Jo Hua So Hua.”

15. Understand what your customers expect from you and Deliver those without demand.

16. This is 21^st Century, Technology plays important role. Do not underestimate the power of Social Media.

Jai Hind. Jai Bharat.

My opinion published in 28/03/2018 Mint News Paper

What to do when Market is continuously rising

This week BSE Sensex touched 30,000 mark, Nifty has already crossed 9000. As the stock market is touching new highs, many of us get jittery about what to do some also get over excited in this market. SO what should we do in this kind of situation and how to avoid temptation and errors while making most in this kind situation.

1.  Numbers are not just numbers look behind them

If we just look at a number in isolation it does not gives any clear information. Time value of money and the basics behind the numbers are more important to understand its significance.  Similarly the absolute number of the Nifty, BSE Sensex or any individual stock may not give a correct picture. We should look at Valuations based on earnings, growth and other factors to determine the actual value of that stock or group of stocks.

2.  Asset allocation is the Key

It is true that equity valuations are currently high as compared to historical averages. Hence expected returns are less. Still if we compare equities with other asset class i.e. bonds, gold, real estate it remains relatively attractive over the long term period of three years and more.

Another factor that determines market levels is Cashflow in the market of funds. Foreign Institutional Investors continuously buying Indian Stocks and Domes Institutional Investors like Mutual Funds are also buying. In this scenario when we do not have any other better asset available we can keep on investing in equity market,  We understand that equities may be volatile in the short term, but investors with a medium to long-term horizon should continue to invest in equities, preferably through SIPs. A staggered approach for investments through SIP or STPs could be better way in this scenario.

If we have a large sum to invest, it is best to park the funds in liquid or ultra short term bond funds and do a systematic transfer to equity funds over a period of time. This may help to average out the purchasing cost over a period of time.

Another strategy for investments in this scenario could be dynamic asset allocation or balanced funds. In Dynamic asset allocation funds mutual funds reduce equity exposure when the market valuations are high and increase it when the valuations are low. Some funds reduces the equity exposure below 65% required for getting equity tax benefits through derivatives.These funds can also be looked at to reduce equity exposure while getting the tax benefits in more efficient way.

Corporate Results, inflation behaviour and the interest rate movements, implementation of GST are major factors which should be looked at in near future to seek the direction of the market.

3.  Understand the actual risk

Normally, the large cap stocks are value higher as compared to mid and small cap stocks. However, currently it is the other way.  Mid & Small cap stocks are value much higher as compared to the large cap companies. This could get corrected to its normal levels in near future. In this scenario its better to be more careful while selecting stocks or mutual funds so as to avoid potential risks.  

4.  Nothing comes cheap so be careful

When markets are at very high levels people get tempted to buy penny stocks assuming they may multiply in future. Some people think that if stock price of a a company is very little it means the risk is also little but this is not true. Ultimately the return is calculated on percentage terms. If a stock priced at Rs. 4 falls to Rs. 2 or a stock of Rs. 1000 falls to Rs. 500 the loss will be same. As a basic we should always remember that any company’s stocks has to be valued on the fundamental factors like business growth, management, financial performance etc. and not on the absolute price.

Further little priced penny stocks could also be easily manipulated by operators and are best avoided.

5.  Trading has more excitement than actual gains

We keep on hearing various stories from friends & relatives that someone has made lot of money by day trading or playing in the futures and options (F&O) markets. It’s not so easy and may not be always true. We should understand that trading is a specialized activity and requires lot of expertise and knowledge of the market. Small investors should better to keep themselves away from these temptations.

6.  Insure the risk

The large investors who have significant equity exposure can take hedging positions to reduce their risks in equity market. investors can follow less aggressive hedging strategies like buying puts at higher levels and selling at lower levels to protect themselves from significant falls along with covering a steep rise in the markets. 

When something goes to a new and uncharted territory, proper prudence and maturity is required to see beyond the current hype so as to not get carried away with it and also to keep the eyes on reality. The Indian stock market may be like that at this juncture hence we should keep our eyes and ears open while taking any kind of decisions in this market.

Brexit and India; How are we placed in the current crisis !!

Last week United Kingdom voted in favour of exiting the European Union, which was kind of surprise to the world as most of us were expecting that it will remain with Euro.  Due to this surprise globally almost all the markets reacted negatively and Indian market was not different. Reacting to this news Indian market fell more than 2% on Friday, Rupee fell by 70 paisa against dollar, and FIIs were net sellers. Pound is trading at it 30 year low against dollar. Gold, Silver and Crude prices went up. So what will happen going forward, is this the end of the world, how Indian markets are placed, can we face this situation? Indian investors have all these questions in mind. So lets try to find out the possibilities and likely situation.

Let’s first understand the negatives:

1.  This will open a Pandora box of exiting from the European Unions. Many other countries like Greece, Ireland etc. may also follow the UK style voting. Various groups opposed to the EU membership in other European countries have already started demanding their own referendums. This will increase in risk aversion when it comes to investing. 
2. Britain votes for exiting then businesses in Britain will be at a disadvantage, and London being the financial capital will lose a lot of sheen.
3. This sudden increase in global risk aversion will have negative impact on the inflows from foreign portfolio investors (FPIs) to emerging countries and India will be impacted due to this. Money will move out of Britain and will affect currencies including INR (£ will weaken and $ will strengthen) and in turn affect the global economy.
4. European Central Bank has its limitation to fight this situation, with interest rates at rock bottom, some of them even negative, there is a limit to how much further stimulus central banks in developed markets can give their economies; 
5. India exports a range of goods and services to the UK, including apparel, motor vehicles, pharmaceuticals, IT services, and gems and jewellery. Indian bilateral trade will be impacted due to fluctuating currency and global stock market volatility. Indian companies having base in Britain will have a smaller domestic market, rest of EU will become an unprotected export market
6. The other major global even is US Fed raising rates, however due to Brexit it may not happen soon but this risk will remain on the global markets.
7. For India the upcoming Foreign Currency Non-Resident (FCNR) fixed deposit redemption due in September is a major currency risk. However as per RBI governor and other experts this FCNR redemption in September should not be a big worry.
8. For India, Inflation is slowly moving up and will have impact on the economy. Rising Crude oil and food items prices will restrict RBI to cut rates from here onwards. This will have impact on the markets. Any further weakness in the rupee will also tie the RBI's hand in reducing the rates.
9. Indian banking sector is facing a challenge on account of huge NPAs and needs a serious policy directios for the regulator.

So, how are we placed in this scenario and can we face this situation, lets understands the positive factors also in the current environment

1. Indian economy is much stronger than it was 5 years ago thanks to sound monetary policies by the RBI, softening of commodity prices which ensured fiscal discipline, stable and able Government at the Centre and reforms initiated by them.
2. Though UK has given its referendum, the Brexit will not be happening overnight. Its a gradual process which will take at least 18–24 months to complete as the new UK Government will have to strike new deals with other countries.
3. Brexit has driven away fears of a US Fed rate hike at least for the time being and could lead to lower commodity prices, which would be good for the commodity importing countries like India.
4. The immediate impact of Brexit has seen the US dollar appreciate and this usually sees commodities with strong links to financial markets weaken. Since money gravitates towards the appreciating dollar, commodities take a back seat. A sharp drop in oil and other commodity prices will benefit a number of companies India.
5. Although Brexit will have impact on Indian GDP growth but still Indian economy is the fastest growing economy although it may have some impact due to Brexit but it will remain at top on the GDP growth.
6. Higher GDP Growth rate, fiscal deficit within reasonable limit and lower current account deficit is seen stabilizing the economy.
7. Lower base, benign commodity prices, government policies along with increased capex could help earnings to improve going forward.
8. A good monsoon will help in reducing the food prices and also help to boost up the demand from rural India.
9. A good monsoon and high GDP growth/corporate earnings will be a positive for the Indian market. Especially domestic oriented companies may do well in this scenario 

So what a long term investor should do in this scenario:

• Markets always have a habit of obsessing about one or the other factor over a short term, be it Brexit, Grexit, terror strikes, Iran issue blah blah blah…so for a long term investor its not necessary to react for everything and anything.
• A long term investor should learn to ignore every form of macro information and just stop trying to predict them. Nobody knows exactly what is going to happen. And everyone is trying to give their opinion, and someone is bound to be right just out of sheer luck.
• As happen in past no news continues to be a news forever similarly in few months nobody will even talk about Brexit (now the official news is here), however, it is also true that something new will pop-up on the horizon soon. Something related to oil OR China OR NORT KOREA OR IRAN OR US OR Fed OR COMING ELECTIONS whatever, and there will be talks going on everywhere
• If we have selected right stocks/mutual funds and have confidence on them and have surplus funds, its always wise to buy when everyone else is selling so go and buy more in uncertain and volatile scenarios.

25 Years ago on 21st June 1991, PV Narsimha Rao took oath as Prime Minister along with Manmohan Singh as FM. Sensex on that day was 1360 and today it is 26,400. Growth of almost 20 times in 25 years.

Now let’s go in flash back and see what happened during this 25-year period.

The Babri Masjid demolition and subsequent riots...the worst foreign exchange crisis, Mumbai Serial Blasts, Harshad Mehta Scam, Nuclear tests, Kargil war,  The IT bubble, Ketan Parikh Scam, the 2008 housing bubble, Satyam Scam, European Crisis, Droughts/ Worst Monsoon,  All time high crude oil Prices, Inflation in double digit, 26/11 attack etc.. etc...

All these events by themselves are good enough to scare the hell out of anybody. But wouldn't we made money by forgetting about them and believing in the power of trade and commerce instead? As we have seen in the past the business goes on even if there is a bomb blast in neighbouring country, the ticket counters at the multiplexes are crowded as ever. Businesses at fast food restaurants remains as brisk as ever.

So let’s concentrate more on picking the right stocks and schemes and focus to remain invested for long term as per our own financial goals rather than worrying for anything and everything in this world.