Beyond the Market's Noise

In the ever-volatile market, the key is to embrace reality, remain patient, and remember that Mr. Market exists to serve, not to guide—turning challenges into stepping stones for long-term wealth.

Common sense is rare. People usually only learn common sense after paying a heavy price for violating common sense. - Charlie Munger

As equity markets are slowly going in the red, investors are getting restless with their portfolios. Small caps and Mid caps were the darlings of the recent bull run; they have corrected heavily and their journey continues in the red resulting in some serious jitters.

Large cap stocks on the other hand have stood their ground. But for many investors (like me) their returns have not been upto the mark in the last 3 to 4 years.

India’s best private sector bank has given almost 0 returns in the same time. And an energy company that was supposed to go bankrupt has emerged as a star in the whole process.

Word on the street is that Banking as a sector is over for most investment themes. That’s a bit far fetched. But you get to hear all stories in a market that has lost common sense.

Because everything seems easy. As an investor, all you need to do is just punch a few numbers on screener, track their charts - see how they have moved in the last 100 days and your portfolio is ready.

I genuinely wished if this was as simple as it sounds.

Take Berkshire Hathaway as an example; we regard it as a fortress-like company, managed by Warren Buffet, Charlie Munger and some of the world’s best investors, standing strong for over 60 years.

Yet, its stock price has dropped by more than 50% - three or four times.

If you are looking at the charts and see such a stock not giving any return in the last 100 days and decided to pass over, then you definitely missed out on the greatest compounders of all times.

My point is that a raging bull market gives space to a lot of punters and wrong trading strategies that eventually result in erosion of capital.

Our fundamental attitude as an investor is that the macro environment exists objectively; we can only accept it. Because the world exists objectively, and does not change due to our desires, imaginations or subjective judgements.

In investing, we must take the world as it is, not what we wish it to be or what we want it to be. It is what it is, take it.

Here’s what you need to do:

As the equity markets correct, there will emerge of string of opportunities for investors.

Indian equity markets have some amazing promoters who efficiently run their companies. They have global ambitions and are ready to take up the challenge.

We are witnessing massive capacity expansions (money reinvested in the business) in many sectors and that too with low debt (loan from banks or outside). It’s a perfect combination.

And lower prices will ensure tremendous margin of safety in these stocks for your portfolio.

So the onus is now on the investors, whether they wish to get panic in this storm or sail out it like a star.

Just remember one thing - Mr Market is here to serve, not to guide.