The Market Abides: 2020 EditionĀ šŸ˜‰

 

All glory comes from daring to begin.

: Ruskin Bond

 

 

Fan’s of “The Big Lebowski”, from award-winning maverick filmmakers the Coen brothers,Ā  would be familiar with the quote “The Dude abides.”Ā  The Dude, in his unflurriedĀ state of Dudeness,Ā lives on. Unperturbed by the chaos around, the dude takes it easy.

So did the market in 2020.

When we had just started back in 2017 we foundĀ an amazing video, of all but 3 minutes that drove this point beautifully.Ā It charts the growth of Rs 100 invested in the BSE Sensex from 1979 to 2017 through multiple events – good and bad. This is a good year to watch it again to see how resilient the market and by extension the human spirit is.

 

 

Now back to 2020.

 

We were all here, we all know what happened so no point going over it again.Ā  Instead, we will do some quickĀ recap listsĀ šŸ˜Š

 

 

Our 5 biggest “investing” lessons

 

1/ Asset allocation driven rebalancingĀ is your only friend. In March it would have asked you toĀ rebalance into equitiesĀ and today it will ask you to rebalance out of them. Follow that advice.

 

2/ Consolidate your portfolio during market downturns. That’s when the tax incidence of selling your funds or stocks will be the lowest. More investors are looking to consolidate now when everything is in the money than in March when consolidation would have been virtually tax-free. It also seems we are the only advisors making this point.

 

3/ Bull markets don’t care about your investment thesis. Everything goes up. Fortunes are actually lost in the last stages of a bull market due to investing hubris and bad decision making. It’s just that the collections happenĀ during the ensuing bear market. Don’t chase, don’t make those mistakes.

 

4/ If you don’t buy a dip, you are unlikely to buy a correction. The feeling to buy 10-20% lower is highest in deep market corrections. So stop making fun of young investors who are buying the dip. They have got that part right. Let’s hope they continue to do so during market corrections as well.

 

5/Ā Harvest your taxesĀ through the year. IfĀ you waited till Feb or March of 2020 for tax gain harvesting there would not have been any gains left to harvest.

 

Now go back and read the list again.

 

None of the learningĀ is unique to 2020. And that’s how it should be. We have written about them all many times before. It’s just that we never imagined a single year would bring so many of them to fore with such impact.

 

5 most-read articles in 2020, in no particular order:

 

Zen and the art of investing – simple stories to understand markets and our reaction to themĀ 

 

Is it a good idea to buy the best performing funds?

 

Concentration Builds WealthĀ 

 

5 Hacks to Avoid Financial MissellingĀ 

 

Nasdaq ā€“ Party Like it is ā€˜1999ā€™Ā 

 

And 2 podcasts featuring usĀ 

 

Podcast: Is robo-advice right for you

 

Paisa Vaisa: Investor’s edge specialĀ 

 

For better or worse 2020 is done and dusted. And for 2021 let’s keep it simple, again!

 

Get up. Dress up. Show up. Never give up.

 

Happy investing,
Gaurav
CEO | kuvera.in |Ā @rustapharian

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Feature Showcase: Tax Harvesting

Tax Harvesting is a technique that utilises the ā‚¹1 Lakh annual LTCG exemption by selling and buying back part of your investment such that you ā€œrealiseā€ gains and not pay taxes on them.Ā At a 10% LTCG tax rate, you could save up to Rs 10,000 in LTCG taxes every year by doing this diligently.

Do not wait for February / March of FY21 to harvest taxes. Do it as early in the financial year as possible – as happened in FY20 you may not have gains later to harvest!

Like all our features, Tax Harvesting optimizes on your entire portfolio – bought on Kuvera or imported from elsewhere.

Start harvestingĀ today.

 

 

 

 

Interested in how we think about the markets?

Read more:Ā Zen And The Art Of Investing

 

Watch/hear on YouTube:

 

Start investing through a platform that brings goal planning and investing to your fingertips. VisitĀ kuvera.inĀ to discoverĀ Direct PlansĀ andĀ Digital GoldĀ andĀ start investing today.


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