Was 2020 a Leap Year or a Year without any Leap? Answers may differ based on the experiences you had. But my best learning was – Never Let a CRISIS GO WASTE. So I learned a few things and have made corrections in my mind to be a better person in 2021. Here are my Behavioural Lessons for 2021.
Before I tell you what I learned, let me & my team wish you a Very Happy New Year!
We are something in the Industry because we are passionate about serving you, solve your problems & help you grow financially! It’s You…
I thought to share on top of mind things that I learned & pondered over in 2020.
In no order of importance…
Behavioural Lessons for 2021
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Forecasting is a dangerous game… Complexity is making it more difficult.
Who could have predicted a washout year in Jan 2020?
And, then everything went up … Commodities, Stocks, Bitcoins & property during the year-end.
It was first my Behavioural Lessons for 2021 – When speculation is on the rise, many come in front to increase the supply side.
No one understands the world… it is better to accept the fact. A couple of years ago, one of the Russian professors predicted that the US will disintegrate and his article came in the World Street Journal.
Similarly, look at the chart below… none of the economists could predict the US 10 Year Treasury Note Yield! Not even when that again got a chance to revise their year start prediction on a half-year basis.
Many economists have already accepted that 3rd world war has been won by China without firing a bullet! Did all these predictions make sense?
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Jumping between assets, schemes, or even advisors, is opening up a new risk front
What if the vaccine had taken more time or impossible to be invented? The world is waiting 40+ years for the vaccine or treatment for AIDS!
Markets went down then came up… what if they failed to bounce back in the near term?
Many thought so and closed SIPs. They even withdrew funds that had a use after 15 or 20 years like retirement. Now they are in a zone of “no return”.
Was the panic justified? Stock Markets was smarter than most of us.
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Buy & Hold still works provided you have good assets & you believe in it.
Buy and hold in our would have meant sitting through an excruciating & painful 35%+ peak-to-trough drawdown… that too in a month.
It also meant experiencing a 50%+ recovery from the bottom. This means the total of these two polar-opposite market moves is a year-to-date gain of more than 15%.
But, buy & hold will work on good quality assets. For others, it may be time to burst!
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Debt is Equity too… in price fluctuations
Most important Behavioural Lessons for 2021 – Debt is volatile too and one can lose capital in the short & long term both.
You may laugh at it but ask who has money invested in Franklin schemes under winding up or someone who invested on Yes Bank AT1 bonds.
More than 10 schemes in MF are underside pocketing, waiting for the money. Debt is like any asset and perhaps with more factors of influence than any other asset.
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RISK & WEALTH – What You Don’t See
The famous dialogue taken from Prateek Gandhi starred Scam web series – “Risk is Ishq” does not work in the practical world. The more you accept something, the more chances it is going to lend on your lap. Harshad also went through that phase when Risk-Taking became his oxygen, and one day… it all being down.
Similarly, Wealth is also not seen by visible eyes. The jewels, the glamour, cars, lifestyles that we see are an acknowledgment of being rich.
Wealth is what has left afterward you use the money. Rich is how you show yourself to the world. The money can be from any source. But wealth commands respect. It signifies that you have worked hard for it & you have kept it growing.
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Sunami of Ignorant, Uninformed, Innocents & so-called experts is coming
Sorry, but WFH (work from home) has its benefit and damages too. Many laptop/internet/phone owners have suddenly discovered the power of stocks. They have come on the back of mis or ill information. Once the tide turns they will be sore losers.
These experts are Type 1 & Type 2. Type 2 is more dangerous.
A disgruntled investor will create further misinformation by showing his pain. He will not talk about his mistakes but will spill them on markets and other participants.
Be wary of these as they will damage your basics around savings, planning & goals. They surely need peace of mind, but you are not responsible to provide this by listening or believing them.
Hope you remain well and shine in 2021 as well! Take Care…
I read a lot of blog posts and i never heard of a topic like this. I Love this topic you made, really amazing.