Yesterday one of my investors asked me about inflation. “What do you think about the market at these levels of higher inflation?”
My answer to that was a question and a statement. “What can you do about inflation? Things that are not in our control should not bother you, instead, you should think rationally and move forward with your long-term plans.”
Let me ask another logical question that often disturbs me when I face such challenging Times.
“Have you, by any chance, invested all your money when the inflation was at its lowest and withdrawn when it shot through the roof?”
Probably not! No one does that.
This write-up is basically my personal take on the economic movement of India when pitched against the rest of the world. I am not an economist, however, I am willing to learn and place myself and my clients in the right place at the right time.
Before you go further down in detail, I wish to put some facts here. The fight between Bulls, Bears, the Economy, Micro Data, and the Government is as old as the history of the Stock Market. None of them ever won the fight, only the nation wins. Patriotism wins. Long Term investors have won.
The ever-growing conflicting signals which are emitted in the media have only blurred the clarity, contrary to the purpose it was sent. The talk of the global slowdown is presently at its loudest. Leaving India and Japan, the Composite Purchasing Managers Index has shown considerable deviation from its last quarter. Believe me, India is the only, country standing tall with a stronger PMI and GDP.
FY Core Sector Activity.
What does it mean to a small-time investor when his investment time horizon is 5 to 10 years and 15 – 20 years toward his financial independence?
Technically and theoretically this means nothing as long as you keep your journey of wealth-building intact. These numbers often puzzle a commoner when he is looking for better than FD returns and the investments are a part of their savings.
Some economists often talk about the U-shape and V-shape recovery of the economy. Unfortunately, all these so-called experts talk about the recovery only when the same reaches about 75% of the V’s and the U’s.
If you have to believe them, then it will be like driving forward, looking at the rearview mirror. Ain’t that dangerous?
Tax Collection and Impact.
Tax is the word that every earning member in India hates. Before I go to the details of this infographic from the Ministry of Finance let me put my thoughts on taxation.
There are only two options, “you pay tax or you don’t pay tax”.
The most important point that every individual or Anti-Tax-Crusader needs to understand is this simple fact. “You pay tax only when you have earnings, if you don’t have earnings, you don’t have to pay the bloody tax.”
As an investor, do tax collection numbers matter? Yes, it does.
The tax collection numbers are a direct indication of growth-oriented activities in India. Be it job data, manufacturing, distribution, consumption, exports, and imports. Tax paid by these activities is a crucial indicator of our GDP and economic strength.
As an investor, I love to see a growing collection of taxes which will eventually help my money grow in sectors that I am very bullish about. (My favorite sectors are often shared only with investors who trust me)
Always remember India is not a developed nation, she is a developing one. This gives immense opportunity to garner sectors connected to the length and breadth of India from agriculture to space programs. To be very honest India is yet to have all the sectors benchmarked as an index.
For example AI & Algorithms, Forensic Science, Electric Mobility, Defence Sector, Ayurveda & Alternative Medicine, National Sports, eSports, Education, and last but not least Leisure & Hospitality.
If you think broader and futuristic you will realise there is plenty of room for India to design investment opportunities for us.
Economic Momentum (Slow or Fast)
Where will the economy go is a rhetorical question. There is no clear answer to this until it happens.
Whenever there are three days of a bullish market, almost every media comes out with some sort of negative news and vice-versa.
Any economic chart that shows only one-sided uninterrupted growth had to be taken with a pinch of salt. This kind of macro data can camouflage the hidden dangers within the economic movement, a sector, or a country.
One should always remember a hard fact about India, its demography, and its population. India is extremely wide, ethnically plural, religiously secular, and culturally diversified with 1.4 billion people hungry to make a difference in their life. The present young population of India is not slowing down. They will demand more, consume extravagantly and produce top-notch products.
In a country like India economists and market pandits may go completely wrong due to our country’s humungous potential and variety.
If I have to advise you about investments and financial planning under this conflicting information, I would request you to stay put as long as possible and as prudent as you can be.
Commodity Price Cycle
Sometimes I wonder what the crude oil price has to do with the common man?
Management of the price of essential commodities such as crude oil, energy, pulses, and metals is the job of the incumbent government. The fluctuations in the price of these have never stopped the middle class or the lower to stop working harder or hang up their boots in disgust. Their savings must have come down due to the cost of groceries, however, that never dampened the spirit to live happily and celebrate the smallest of the smallest events in their daily life.
Why would the common man worry when their elected government is least bothered about what is happening to their subject’s earnings and spending capacity.
The most important aspect of an individual’s wealth creation is all about staying on the course completely focused. Adjusting a Portfolio according to the macro data, rumours., and yellow journalism can have short-term and long-term serious consequences to the compounding factor that an investment is supposed to be doing for you. #AdvisorZarooriHai I often quote this not for the purpose of a hashtag or to emphasize my importance. This is only to repeatedly tell you to stay focused on the goal planning, wealth creation, and time horizon well designed with your advisory team.
Make Investment a joyful affair.
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