Equity investments – Lazy is the best strategy

Equity investments – Lazy is the best strategy

The best advice that I ever got for my investments was to “leave it alone”. I remember I didn’t want to follow that advice initially and when a big international event happened, and the markets went into a downward spiral, I wanted to liquidate all my Equity Mutual Funds. I wanted to sit out through the slide and come back later at a better “time”. Unfortunately (I later realized fortunately) at that time, I was travelling on vacation and by the time I was in a position to exit, the markets had already fallen about 10% in just 4-5 days and started to consolidate at those levels. Everyone had realized that the event had little to do with economics and it was a return to business-as-usual

Within a year the investments had recovered very well and were up 20% from the value before the event

Every day, there are small or large events happening around us. Most of these events just effect sentiment in the markets in the short term. I have realized that the Indian economy is rooted in strong fundamental factors of a largely young, educated, hard-working and aspirational population which strives hard to overcome any challenges that arise out of any local or international event. In the last 10 years we have witnessed this phenomena with economic growth slowing down to below 5% and then steadily bouncing back to 7%+

With all the ups and downs, returns from the markets have been 8-9% annualized in these 10 years. Good Mutual Fund managers have delivered upwards of 12% annualized in these challenging times and 18%+ over longer periods

So it’s good to be lazy once you are committed to Equity investments. You may not be doing anything, but the constituent engines of the portfolio are working full throttle

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