Equity Investment is a wealth creation vehicle. Events ( results of General elections) which drive the expectation are a part of the market mechanism. Short term gains or losses and euphoria need to be tempered.
We are in for the long haul. Asset allocation across companies and time horizon is what will make the wealth grow.
A recent exercise was carried out where in investment of Rs. 1 lac ( spread across 5 scrips of Rs. 20,000 each ) carried out in Apr'04 , generated an annualized return of ~ 27%. ( The value on 19th Apr'2014 was Rs. 11.50 lacs). This is without considering the dividends declared over the last 10 years.
The 5 scrips were - ITC , Tata Steel, Reliance, Crisil and Bata respectively. ( Don't be surprised that Tata Steel and Reliance were underperformers in this period , with alpha being generated by the rest).
The 10 year period saw a boom, negative growth, optimism returning , again pessimism.... and now a sense of euphoria.
Let's invest in stocks to generate returns in excess of Bank FD + 2% and not let events drive our decision making process.
Investing is a process and lets continue the process.
It's the same philosophy which is guiding our investment methodology.
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