We had a tremendous journey in 2021, penning down our thoughts on the investment environment. Thank you to everyone who shared our posts, left comments, gave valuable insights and constructive feedback.

All your good words make us bounce back (just like the Sensex!) and churn out our next block of thoughts. The journey of the Indian capital markets has been remarkable in 2021 – encapsulating our cocktail of creativity in this article today. 

We started the year with the skyrocketing of the Sensex beyond 51000…it went ahead and peaked beyond 62000 during the year. The V-shape rebound has been phenomenal with the apt support of the Reserve Bank of India and several packages announced by the Government to support growth.

Then we went ahead and covered the importance of Bonds in our portfolio. Bonding with the bonds is a must for a well-diversified portfolio. Our blog highlighted the upward pressure mounting on the interest rates, and a necessary shift towards lower maturity debt funds would be a good idea. In times of unpredictable volatility, we highlighted the importance of staying put. It is wise not to do anything at times!

Many of our readers took the wait and watch mantra very well. The piece on taper tantrum concerns highlighted that we need not throw irrational tantrums as investors to the inevitable upward pressure on the US yields. Against the backdrop of the second wave of the covid-19 pandemic that created havoc in our lives, we advised our investors about the importance of investor hygiene and portfolio sanitisation. It is critical to have a balanced portfolio based on the risk appetite and investment horizon, making each investor different from the other!

Continuing with the pandemic created catastrophe around us, we discussed the feelings of YOLO (you only live once) against the traditional thoughts of FIRE (financial independence, retire early). The areas of financial planning touched here in these articles were a critical aspect for most of us who went through financial turbulence in our lives during the pandemic.

Subsequently, the blog highlighted the problem of info-demic amidst the pandemic. It is vital for a rational investor to manage her attention to such information – which may/may not be valuable and should/should not impact investment decisions. 

Looking beyond the info-demics, we brought out the changing investment demographics – Cryptos and NFTs – the new flavour for the insatiable investor appetite! The investors were advised to move cautiously on this path, keeping their eyes wide open while they may gradually widen their investment horizons with unicorns. The way our millennials have jumped at cryptos, we are looking forward to covering them more in our future articles. Keeping fingers crossed on the intervention by RBI and the Government on this rising trend. We advised our investors to play safe while believing in DIY (do it yourself) investing. A mighty bull run may seem irrational at times – everyone jumping in makes money. It doesn’t discount that knowledge/ skillset is still the key to being a successful investor. The investors must know how to rationalise the behaviour, realign the portfolio and assure returns in a bear market as well.

Meanwhile, we also drew analogies with the phenomenal performance of our players in the Tokyo Olympics. The investment game is no different – it needs consistency, flexibility and robust mental health. The investors must chalk out their own rules of their investment game based on their risk-return trade-offs. While the economy trembled during the covid period in 2021, the GDP forecasts became pessimistic. Against this backdrop, we covered the enigmatic relationship between the stock markets and GDP growth. The pandemic may have caused blips and even shocks in certain parts of economic growth. Still, with strong policy support and a focused action plan, the Indian economy is one of the most sought-after investment destinations. We are bound to bounce back stronger. The rapid rise in market capitalisation to GDP ratio will not be a bubble that would burst, and the new higher ratio may become the new normal for India. All this optimism is without ignoring the lessons learnt from history, as articulated while covering the Tulip mania – the first asset bubble and the irrational behaviour of the traders before the bubble burst.  

Later in the year, while the Sensex continued its upward journey with minor blips in between, we touched upon the area of responsible investing for our readers. The rapidly rising awareness and relevance of ESG investing (Environment, Social, Governance) was highlighted. In a high probability, timely made ESG investments would prove to be lucrative for most investors in years to come. Finally, our blog indicated the importance of not only being physically fit – but also financially fit in the current uncertain times. An optimal mix of investment nutrients is critical for good financial health. 

We concluded the year while we stared into the crystal ball – learning lessons from the past as we gazed towards a hopeful and brighter future. Investment lessons are best learnt when experienced; however, they are often remembered once the damage is done!

So having covered a cocktail of developments and areas in 2021, I promise to cover and bring out more creative insights to the investor world. For 2022, the year ahead, my only advice to all investors – you are the captain of your ship.

Let your ship be not like the mighty TITANIC to ignore the warning and sink. Neither like EVER GIVEN, an errant cargo ship that blocked the Suez Canal, disrupted global trade and caused huge losses.

Be alert of your surroundings – do not ignore the weather forecast signals around you – we may face a period of turbulence – but a smart captain is always well prepared for any such situation. The investment landscape continuously evolves. A smart investor continually ‘adapts’ and ‘transforms’ along with the changing investment world.

Wishing for a happy and prosperous year!  

Best Regards

 
Dr. Tarunika Jain Agarwal Ph.D.

Alpha Research