The government got its act together on FDI in retail, PSU Disinvestment, land bill and Spectrum price corrections within just a fortnight. That it could pull together so much in quick fire mode is a sign of things to come. Reforms are now a dire necessity. Everybody who matters politically only knows this too well. And, the government knows that this is the moment to be seized. Predictably, the government is going all out. This scenario brings back memories of 2003. Between 2003 and 2004, the pace of reforms accelerated dramatically and ultimately culminated in the India shining campaign. With the SP caught in the crosshairs due to a case and the BSP supporting the UPA fully, the government looks set to unleash reforms like never before. The markets are still in a state of disbelief and this numbed state of mind will change dramatically once the reform momentum gathers pace. With domestic investors choosing to remain under-invested in equities, the stage is set for a sharp turnaround in investor perception. All it needs is a series of triggers.
The worse a situation becomes the less it takes to turn it around, the bigger the upside.
Conviction is at the core of how well your investing will perform. Investors mostly build capital around decisions without building enough conviction. Typically, the largest decisions are arrived at in the most casual fashion. The need for building conviction is often given a pass. The excuses are always the same. Most people believe that things can go wrong anyways and any amount of conviction won’t change it. But, what they fail to understand is that conviction helps you stay grounded to your belief even when things go wrong. This ensures you tide over the tough times till things change for the better. Every investment done at the wrong end of the investment cycle will usually carry the conviction deficit. The hurry to do things is usually the culprit that works against building conviction. There will always be a paucity of time to do important things. But, every investor needs to understand that unless you prioritize, time will always be in deficit to do important things. Importantly, when decisions are made with an implicit conviction deficit, the amount of time lost in recovering capital is much more. The loss of time is worse than the loss of money. Spending years to recover money, investors fail to focus on building any conviction during the waiting period. The loss hurts doubly as investors stay away from investing during the waiting period too. To us, building adequate conviction before investing is far simpler.
Revisit your strategies. 2013 will be very different.