Want to know what ET Mutual Funds think about the investment space in 2022?
2022 was a year of change. and opportunity for investment. In the year 2022 will be affected by the side effects of covid, global inflation, supply disruptions, income growth, China’s slowdown and political crises, geopolitical tensions between Russia and Ukraine and between China and China and Taiwan-US, oil disruptions, etc. This was indeed a very sad situation for humanity, but it caused global equity markets to stumble. US markets have adjusted well, Greater China markets have adjusted more, Indian markets have also adjusted but not as well as others, all because of our strong macro economy, strong economic management and strong income growth. Comparatively, Indian markets have not seen a sharp price correction but have seen a sharp decline in valuations breaking the long-term average, which has led investors to invest and get good entry levels. In the year 2022 has been a painful year but an investment opportunity for those looking for global exposure, especially in the US and Greater China region.
What are your thoughts on 2022 success and failure or what investors did right or wrong in 2022?
I think the Indian markets and economy will take a bit of a hit in 2022 at the micro and macro level. Amidst all the global chaos, India’s equity markets and its investors have shown remarkable strength and maturity, enabling our markets and GDP to outperform major economies globally. Despite high FII inflows, DIIs and especially retail investors have shown high confidence in our economy. All the fears and volatility meant that retail investors remained invested and did not withdraw their SIP investments. On the contrary, retail investors increased their SIPs, helping our country’s monthly SIP inflow reach an all-time high.
Also, what do you think will be the biggest surprise in 2022? It could be an event or category that performed brilliantly or performed poorly in 2022.
What is surprising is that the Indian markets and economy have performed remarkably well and have been relatively successful in isolating itself from global volatility. Full credit goes to RBI, government, corporate players and our investors for this. But the biggest shock was the continuation of the war between Russia and Ukraine, which disrupted supply and demand, costing lives and the economy. Another thing that I wouldn’t say surprising but has done well for 2-3 years since 2022 is the value segment. As the broad-based lineup in 2020-2021 has outperformed globally and in the Indian value segment, we can expect it to perform well as a segment.
Your advice to investors, especially new investors. And what mistakes should be avoided.
Before making any investment, it is important to identify and understand the four pillars: your goal, risk appetite, time horizon and asset allocation. Don’t just jump into investing in any product. Passive investments are large and well-managed units. Newbie investors who struggle to choose the right active products and want to avoid the frustration of underperformance can start their investment journey with simple traditional index products. Also, if you are investing any amount of leverage, you shouldn’t just jump in and invest in the equity markets. When market prices/rates are cheap/reasonable, investing a bundle helps in earning good returns and also helps in avoiding any disappointment in your return expectations. Many people may not understand that there is a difference between timing and forecasting the markets. Real wealth is created when one invests during a bear market and holds on to it for the long term.
Your recommendations for reading, watching, listening to investors.
2 books I recommend everyone read, The Intelligent Investor by Benjamin Graham and The Psychology of Money by Morgan Housel. Making money and becoming rich is not an overnight process, it takes a lot of hard work to create wealth, smart work to invest wealth, patience to generate wealth and persistence to sustain wealth. We should not forget that luck plays a very important role in all of our lives.