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What’s happening to stock markets, economy & your portfolio?

I recently read Rohit Chauhan’s post titledFacing Despair.For those who don’t know him, Rohit is a very capable Indian value investor with a decent track record. Many issues covered his post are also going through my mind. So I thought it would be a good idea to refer to it as a starting point.
In previous post, I mentioned that it made sense to choose companies having an inherent ability to suffer (but not die), instead of those which ‘may’become multibaggers (but have very high mortality rates) when building the core of one’s portfolio. You can read more about our logic here.
What got me thinking is that it actually seems true that days of high growth may be over. A 3% to 5% growth rate may have become the new normal. So all calculations assuming economy growing in excess of 9% and investments returning CAGRs of more than 15% need to be redone to arrive at more sensible investment decisions. After all, its all about ‘not making mistakes‘ in the market. This may sound too pessimistic. But this time around, problems are not in external environment alone. This time around many of these problems lie within.
And the last line of Rohit’s post is quite an eye opener. “I have a day job to support my family. I will not starve even if my portfolio goes to zero”. This statement shows that our portfolio related decision making depends a lot on how we and our families manage to fund their expenses. If you fund it through stock markets, i.e. trading etc, then your decision making may be different from mine. Just like Rohit, even I have a day job and I will not starve if my stock portfolio goes down to zero. I have taken care of the downside, if you ask about my overall wealth. As far as my stock portfolio’s upside is concerned, it will take care of itself. I have a time horizon which is longer than most people. And I am ready to wait out this storm. I am not going to lose my sleep over this. I will rather use this time to keep accumulating good stocks, great stocks and stocks of companies which are here to stay till the time when Indian economy starts looking up again.
I may be totally wrong in assuming that things may not turn around anytime soon. But that is the risk of using assumptions.
Note 1 – If you have read till here, you must have noticed that this post is using the term ‘I’ instead of ‘We.’ This post is written by Dev. The other Stable Investor (Shubhang) does not completely subscribe to this view and has recently started dabbling in short term trades. And for record, he has been making a lot of money in his trades (shorts). 🙂 He still maintains a long term portfolio. Just a disclosure to keep the readers in loop.
Note 2 – Some personal commitments have led to reduction in site & FB page’s update frequency. Hope to change it soon.
Regards,
Dev
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