A manifesto for equity investors

Editor's Note Dhirendra Kumar’s insights and timeless advice for investors --------------------------------------------------------------- 12-October-2024 --------------------------------------------------------------- Dear {NAME}, Every Saturday, I share my perspectives on a topic investors will find useful. This time let’s take a look at how a blend of cautious optimism and long-term vision sets true equity investors apart. A manifesto for equity investors As I write this on the morning of October 9th, I’m feeling more than the usual optimism about India’s future, as every right-thinking person is. Of course, it’s also when most equity investors and analysts worry about the markets being too high. Based on what I’ve been writing these last few weeks, I, too, am guilty of doing this. However, my point has not been that investors should try to time the market and stop investing or even sell out. Instead, I worry that investors will lose sight of quality and start buying junk. Yes, the markets appear to be high, but so what? In our hearts, we equity investors are eternal optimists, mixed with some caution. Our fundamental belief is not in blind positivity but in resilience, growth, and progress. With unwavering conviction, we understand that the future holds more promise than the past. This optimism isn't rooted in naivety but in a clear-eyed assessment of historical trends and economic potential. Consider the big picture. Even in the darkest times, when markets falter and economies stutter, the underlying trend has always been growth. Businesses adapt, innovate, and ultimately generate more wealth than before. This process, of course, could be smoother. We experience years of exuberant growth followed by sobering corrections. 2020 may prove less fruitful than 2019, and 2025 might face unforeseen challenges. Yet, zoom out, and the picture becomes clearer. With the utmost confidence that 2034 will be better than 2024, just as 2023 far surpassed the dark days of 2013. This belief transcends mere numbers on a balance sheet or fluctuations in a stock index. Take away the financial models, the economic theories and the mathematical gymnastics often associated with investing, and you'll find this simple yet powerful belief at the heart of long-term investing. It's not about predicting every market movement or timing every trade perfectly. Instead, it's about recognising the underlying current of progress and positioning ourselves to ride that wave over decades, not just quarters. This optimism doesn't blind us to risks or dismiss short-term challenges. On the contrary, it gives us the resilience to weather storms, knowing that calmer, more prosperous seas are beyond the tempest. This balance of cautious optimism and long-term vision defines the true equity investor, separating us from mere speculators or short-term traders. Stock investing can be complex, but let us remember this fundamental truth. The path of progress may wind and occasionally double back, but its general direction is forward. And it is this unwavering belief in a brighter future that not only drives our investment decisions but also contributes to the very progress we anticipate. In choosing to invest, we become part of the same growth which will generate returns for our investments – it’s a virtuous, self-reinforcing cycle. Therefore, it’s obvious that what we do has two stages. We believe, as optimists, that there will be growth and more prosperity. On the basis of that, we have to choose for ourselves the best investments that can benefit from that. It is not necessary to be able to foretell what will happen. Sometimes, when I discuss long-term investing with some investors, they come up with objections like what is the predicted EPS of a so-and-so company at the time? What will the GDP growth be? What will oil prices be, and so on? Investors who feel that investing is about predicting EPS and GDP have a different set of problems. People like us need faith that the world will grow and a rough sense of which companies are well-run. That’s enough. --------------------------------------------------------------- Thank you for being a Value Research Insider. I hope you found this note useful and interesting. What did you think of today’s note? [Let me know](mailto:editor@valueresearch.in). If you know anyone who would enjoy it, please forward this email. They can sign up for free [here](. You can also subscribe to the Hindi version [here](. Was this email forwarded to you? [Sign up here]( [vro-logo]( Copyright © Value Research India Private Limited 2024. All rights reserved. C-103, Sector 65 Noida, 201301. This notification mail has been sent to you at {EMAIL} because you are a member of Value Research Online. [Manage Newsletters]( [Unsubscribe]( [Privacy Policy]( Follow us: [twitter-icon]( [facebook-icon]( [youtube-icon]( [linkedIn-icon]( [instagram-icon](