Following the Covid-19 lockdowns, India has observed an increase in the number of demat accounts established.
Around 114 million demat accounts were established in 2023 alone, which is around 2.8 times the amount in 2020. Such has been the excitement of the bull market we are seeing.
As a result, the number of traders giving recommendations for hidden payments has surged to an all-time high. Furthermore, there are several YouTube videos in which persons with minimal knowledge of finance and stock market operations have become overnight financial influencers. There is too much unnecessary information swimming around for no purpose.
In summary, the drama around stock markets is intensifying.
Think about it.
Several railway and infrastructure businesses’ stock values have risen dramatically in recent years, despite little change in earnings or fundamentals. Whereas a high-quality bank like HDFC Bank, which has been holding the ship steady, lost around 18% in January 2024 alone.
So now you have folks on YouTube and television attempting to defend everything.
- If the market rises, there is ample rationale.
- If the market crashes, there is ample justification.
So what should an investor do in such a scenario?
It’s simple: simply keep purchasing!
In the long term, stock markets are a net positive predictor of wealth accumulation. They cannot become zero. It is not their nature.
It’s a basic chart showing the performance of the Sensex, Midcap, and Smallcap indexes over the previous 20 years.
You don’t have to go into great depth to realize that markets continue to rise over time. We have witnessed the consequences of the 2008-09 disaster, the 2013 crisis of India becoming a Fragile 5 country, and the Covid-19 outbreak.
Still, costs continue to rise.
Take HDFC Bank for example.
This stock has generated a lot of buzz in recent weeks. Many of the children born on the bank’s debut day believe that the bank’s future is finished.
I feel that some of these young people are jeopardizing their jobs by making foolish comments on Telegram and YouTube.
Because, during a three-year period, HDFC Bank’s stock has been flat.
But if you look at the last 2 decades, then the story is completely different.
It has been a gigantic wealth-building machine for investors. I’ve written about my personal experience holding the stock, which is currently up 30x. +
Now let’s take another example: Bharat Heavy Electricals Ltd. (BHEL)
It has emerged as a stock market favorite during the previous three years. Some individuals wish to possess it, while others are curious as to why they did not do so.
Let’s see the charts.
This chart makes your heart melt by missing out on the stock.
Just look at the chart, if you had owned it for the same period as you would have owned HDFC Bank.
It would have been your worst nightmare of a stock in the portfolio.
Agree to disagree?
So, as an investor, you would have gained money if you had just invested with a mutual fund or a portfolio manager whose top holding was HDFC Bank rather than BHEL.
The ownership arrangement of both firms provides significant insight.
HDFC Bank
BHEL
BHEL has an extremely low institutional investor ownership (FII + DII) of 25% at best, compared to HDFC Bank’s 82% holding as of December 2023.
However, we are often tempted by the desire to make a fast buck. So we often make the error of timing the market. This never works. As a result, in 2024, we will witness far too many people quitting their social media businesses or becoming financial influencers.
One day, they would vanish into thin air, leaving your trading money in the red.
So what should you do if you don’t wish to be in red?
So all you have to do is turn off the markets and continue investing throughout. If you don’t need your money for the next 15-20 years, don’t worry about what’s occurring now.
Simply leave it to the professionals.