Is the dream run over? Have markets crashed or have they paused?
One hears anxious investors simply abandon their confidence with every fall in stock indices. As the years advance and public participation in stock markets grow stronger, our patience for corrections simply isn’t enough. Our impatience grows on us, our peers, and on those who are watching the stock markets from the outside.
When markets correct even 3%-5%, a whole lot of doomsayers start getting louder and louder. They question the market’s stability. Questions tend to get louder and louder, building into a market chorus. The market chorus usually grows either into optimism or pessimism, depending on the overbearing sentiment.
For now, it seems like there is a sudden shift from extreme optimism to extreme pessimism. The reason is the imposition of a small tax on long-term capital gains. Interestingly, existing profits have been protected, making that tax only on future profits. This makes the market look utterly irrational in its behaviour.
Actually, this budget reminds you of the James Bond film Skyfall. After all the expectation and hype, it has simply failed to bring a spectacular close to the four year Modi rule. The climax seems to have bombed. Going by the market box office verdict, the ending seems to be rather abrupt. For investors, it is probably the time to be more pragmatic. One can take some solace in the lines of Adele’s much-awarded song, Skyfall.
“Let the Skyfall
When it crumbles
We will stand together
Face it all together
At Skyfall
At Skyfall”
After all, India is the most promising global investment story for the next five years. It would be a tragedy to lose ourselves to near-term investment myopia. Budgets don’t change the direction or outcome of the Indian growth story, they only change the subplots.
“Return alone—and especially return over short periods of time—says very little about the quality of investment decisions.”– Howard Marks
