New Year Resolutions; Write it to right it

India Infoline News Service | Mumbai |

I am afraid, it appears that gold might be peaking out as last year Gold price appreciation is down to a multi-year low of ~10% on a yoy basis. In fact, if this worst yearly return for the last five years continues for a few months, we will enter a scenario where gold price will be under-performing bank FDs, the first time in 5-6 years.

Wish all of you a very happy and fun filled 2013. Given the fact that the world didn’t come to an end in December 2012 as many predicted, we can only say that 2013 should be a better year than 2012. The Sensex gave almost 26% returns in calendar 2012. It was unexpected, given the mood in the beginning of the year. It was sombre with the Anna Hazare movement gaining momentum, rupee depreciation and the weak outlook on the economy. External factors like Greece were other dark clouds on the markets. I don’t think macro economic factors changed during 2012, yet, once the finance minister changed, the markets went into turbo mode and ended the year with gains. We also saw record FII inflows.


Now, you have almost everyone talking about markets touching multi year highs in 2013. It is evident that the mood has suddenly turned extremely bullish. In fact our research team has titled their recent top picks as Lucky 13 for 2013.


The tragedy affecting the Indian market is the exit of the retail investor. Most of the Indians don’t believe in Indian stocks and are opting to put their money in FMP / fixed deposits and gold. I am afraid, it appears that gold might be peaking out as last year Gold price appreciation is down to a multi-year low of ~10% on a yoy basis. In fact, if this worst yearly return for the last five years continues for a few months, we will enter a scenario where gold price will be under-performing bank FDs, the first time in 5-6 years.



In this backdrop, it will be interesting what retail investors do. The foreigners continue to remain bullish on India simply because they are looking at a geography where the economy is at least growing at 5% when rest of the world is not growing at all.


My message to all retail investors is to have a financial plan. There are many studies which prove that the key to successful investing is asset allocation and staying invested for the long term. Timing the market is very difficult. It is impossible to predict the movement of the market correctly on a daily basis and retail investors should not even waste time predicting this. One should invest in a disciplined manner for the long term and have financial assets put in equities, debt, gold and real asset. I know real estate is an illiquid asset but at least everybody deserves a house over their head for shelter.


I also wish to politely submit that, this year my resolution is to write every week. The sage advice that I have got is to set goals in writing and make them public; then chances are high that they will be met.  So here I am taking the plunge – and setting myself the target of at least 50 blogs. Hope you enjoy reading it as much as I enjoy writing it.


 

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