If you qualified in 2007..and started a SIP in 2008 in a long term equity fund, chances are your account is still in the red. Trying telling this kid ‘In the long run you will make money’. Even well qualified and older persons are finding it difficult to believe their ‘wealth creation strategy of doing a SIP’.

Sorry all kids who listened to me and did start a SIP…Not sure if anywhere in my blog I have said that 5 years is long term. If I have said that, sorry I have been really tested, and perhaps proved wrong.

Also the country is going through one extraordinarily tough period of time. The ruling party and the chief opposition party are extremely weak and have almost a zilch ability to hold an election now. So the political power (esp in many states) are with the regional parties. And this, they say, is the new normal.

Either the regulator or the courts are running the country. IRDA has ensured that NO pension plans are being sold, TRAI and the SC have made sure that fresh investment will not come in the telecom sector. So shares like SBI, Icici, Hdfc, and Kotak will languish and their insurance subsidiaries will plod.

Almost all the internal pricing (subsidised) has failed. Petrol prices cannot go up, railways cannot increase the fares, and fertiliser prices (and therefore foodgrains) are completely at the government’s mercy.

This is literally forcing all the money to go into FMCG (no regulator, ahoy!) – and the price earning ratios are in the stratosphere…..

The best thing in the equity markets are that a few good years WILL be followed by a few bad years. Now if you have sufferred the degrowth for 3 years, your being patient is perhaps the only thing to do.

I was talking to one of the best brains of Indian equity market – he had told me about 6 months back ‘the fmcg party is not yet over, new money continues to go there’.

Now I am not sure…but if you have your SIPs going, DO NOT INTERRUPT..

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  1. Hi Subra,

    From past 2 years I am running SIP in the following funds. HDFC Top 200,DSPBR Top100, HDFC Prudence. Shall I continue the SIP’s as the goal is for long term.

    Regards
    Krishna

  2. Subra:

    I believe the valid questions before doing SIP should be:

    Long Term – How long is your long term! 5/10/15 years or forever!!!
    Even if you are IN for Long term at what point do you drop the towel and avoid further bleeding!!!
    Investment – STOP investing blindly and start understanding few basics as there nothing called FREE LUNCH…

    Just to provide perspective take a look at below chart:
    http://www.advisorperspectives.com/dshort/charts/large.html?guest/2012/Peter-Williams-DJIA-we-are-here.png

    We are in market turmoil or sideways action period and might remain in this period for another 2-6 years before the NEXT significant BULL market…

  3. //I was talking to one of the best brains of Indian equity market – he had told me about 6 months back ‘the fmcg party is not yet over, new money continues to go there’.//

    True Subra… See the results of HUL/Dabur… Seems nothing is stopping them…

  4. Karthik, Dheeraj

    In any party the skill lies in leaving the party BEFORE people start puking. If you have had your quota of booze leave, do not wait for the 12th peg. At the 12th peg the horses will turn to mice and the carriage to a pumpkin

  5. Subra,

    I hope the markets remain low for some more years. My SIP’s will acumulate quite some amount by then. The rise when it comes will result in significant returns. In real life it is not the % return but the actual amount of capital gain that matters.

    Best thing to do is remain within your Debt / Equity limit. Now is the time to put money in equity and mutual funds are the ebst for a lay investor.

    When markets go up, it will be the time to remove money from the equity based investments.

    As regards HUL, it is a old favourite of mine. such companies should always be held for loong time.

  6. Subra, one line I always remember from one of your post.. it was something like..
    Markets will do whatever they have to do.. one should do his/her part..

    I always keep that in mind…

  7. i really hope those stopping their sips stop asap and even the most optimistic ones throw in their towel.that will be a signal that a turnaround is imminent.

  8. Subra, I remember of one post where you sounded confident of market reaching 30K levels in next 5 years. A complete U turn in few months.

    Recently I toured 10 countries as part of business delegation and no where such dire conditions of no power and water is seen. The garbage disposal and road conditions were even pathetic. A lot of first timers to India could not believe and imagine the ground conditions which contradicted their studied information of India on media concerning growing economy and next super power. There were repeated questions whether we have any authority/body to collect the garbage or supply of water & energy or road maintenance.

    One of th guy from the Middle East was confused. Even with no drop of rain, they could supply water 24 hours/365 days. With so many rivers & lakes with sufficient rainfall each year, it is beyond his imgaination why housesholds in India could not receive continuous water supply.

  9. U turn? i have not taken a stand at all ever on my blog except:

    ‘In the long term equity will give better returns than bonds’. I will always be 90%+ in equities; my expectation from equities is about 12% p.a. – anything above that is great’. In the last few years, I have got better returns than my expectation – I treat that as luck alpha.

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