A roller coaster ride is part and parcel of investing in the markets, highlighted especially since March 2020 when they have plummeted and reached all-time highs, only to tumble again thanks to Russia-Ukraine. Here are some ground rules you can follow
When a friend from Kolkata called up Nilesh Shah to ask why his portfolio had not generated the returns that the Kotak Emerging Equity Fund had, the latter first thought it was because the friend was comparing the returns of his diversified portfolio—which included gold, real estate and debt—to those of a mid-cap high-risk fund. When the friend said he was talking about his equity portfolio, Shah, managing director of Kotak Mahindra Asset Management Company, decided to take up the matter with the friend’s accountant. The accountant informed him that his friend had booked his losses in equity in March 2020, at the bottom of the market, so how could it deliver the SIP kind of returns the fund had generated?
“I immediately called up my friend and he said, ‘Covid-19 tha, there was so much gloom so humne bech diya (It was Covid-19, there was so much gloom, so I sold it off). This was an informed investor who did not need any money but because he panicked, he ended up converting a notional loss to a real loss.”
(This story appears in the 08 April, 2022 issue of Forbes India. To visit our Archives, click here.)