Remember the Slumdog Millionaire movie?
Well, they picked up a kid from the slums and made a movie based on the book by the same name. The kid from a slum was scrubbed, cleaned and fitted into a world of ‘clean bodies and unclean souls’.
So far fine.
Now this kid went from slum to 7* comfort. Then the shooting was over. Cut.
Back to the slum. Will he see 7* comfort again? doubtful. Hopefully yes. Maybe not.
Cut to the investment side of life. If you were a young MBA starting life in 2001, 02, 03, 04…or even 07, life was good, well almost great.
Salaries went up 30% every year. People whom you would not have taken as clerks quickly became Vee Pees. Literally donkeys got the jobs of derby horses, and many came up trumps. The markets were booming, life insurance companies were recruiting managers, vee pees, agents, taking offices on rent, – and everything was hunky dory.
Then came 2008. All assumptions vanished. The feel good portfolio of Rs. 23 lakhs shrunk to Rs. 14 lakhs. No longer could you buy in the morning and sell in the evening and earn Rs. 5000.
No longer could you see your SIP statement on a monthly basis and feel…’ha I invested Rs. 28000 it is worth Rs. 43,000′ – it looked more like 26000!
Now tell these people that:
2002-7 was a dream run, they hate you.
such a steep rise MAY not happen in your LIFE time, they think you have lost it. (I am not saying a bull run will not happen, but a 7 fold rise in 4 years seems to be impossible in MY life time in the sensex).
forget 30%p.a. increase in salary, be happy with 30% OVER 5 years, they look like you are from Mars.
Jobs are being lost – they say I have 3 job offers on hand (God bless them).
What to do?
Reconcile, the golden period may now be in the past, even if you are just 35 and have 20 WORKING years to go. However thanks to Modi, falling commodity prices, QE by many parts of the world, markets may continue to rise for some more time (25% for financial year 2013-14 is not bad, is it?).
This can happen to businessmen and companies too. One company I know which was totally dependent on a big pharma company for its business had to close down because of a merger. So be careful of the Slumdog Millionaire effect – it can come in terms of source of revenue, time or whatever. Be alert.
Sad but true.
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