2016 proved to be a tough year for the Indian markets. Indices went nowhere. Mutual funds also did similar with PPFAS NAV going up just 4% (This is one of the best funds, in my opinion).
It was also an Unexpected Year with the best returns coming from the commodity industries - Paper, Sugar, Metals did well while Pharma, IT, Financials struggled. Not many would have predicted that!!!
Two great articles that I read about 2016 learning are Here & Here.
My Learning- Year proved to be quite a tough one for my portfolio with portfolio growing slowest in last 5 years. Though was lucky & could manage to achieve double digit growth.
What better to expect from a portfolio that was devoid of commodities!!
With the benefit of hindsight bias, the Three mistakes of 2016 were-
1) The 'Not to be' Big Bet- A business is about to be demerged into two parts- (a) This segment is leader in consumer durables & has been sold to a PE player which will give open offer at around Rs 100/- per share. (b) Has power, industrial etc segments & is not losing money. How much of portfolio to allocate to this if stock comes to (i) Rs 100 (ii) Rs 120?
This should have been a big big bet (15-20% portfolio allocation) at Rs 100 & also, should have taken 5% or so allocation at Rs 120. However, when it touched Rs 120, I kept waiting for Rs 100 & hence, fully missed the 100% upside that followed next.
Never Wait for Absolute Bottom, Keep SIPing downwards in stocks with strong fundamental bottom, as long as fundamentals don't change.
2) Not touching The Untouchables- 2016 was the Year of the supposedly Untouchables- Paper, Sugar, Metals, PSUs & even few Chemicals. Having happily ignored most of these in the past years, I chose to do the same in 2016 & as a result, missed the big run in these names.
3) The Longgg Term Thinking- When Black Swan strikes, you run for cover. Market did same in case of NBFCs, MFIs & Real Estate. Despite holding a few names & being clear of near term hit, I chose to hold these with belief of being long term investor, hence missed a great exit & later, great prices for re-entry.
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2017- Based on my limited thinking, 2017 (at least first 2-3 quarters) looks to be tough. DeMo impact on earnings, not so cheap valuations, FII selling, GST hit in near term should prevent Indices to move up a lot. Hopefully a good Budget & DII fund flow should prevent a big downside.
But can't rule out the unexpected as 2016 has taught us.
It was also an Unexpected Year with the best returns coming from the commodity industries - Paper, Sugar, Metals did well while Pharma, IT, Financials struggled. Not many would have predicted that!!!
Two great articles that I read about 2016 learning are Here & Here.
My Learning- Year proved to be quite a tough one for my portfolio with portfolio growing slowest in last 5 years. Though was lucky & could manage to achieve double digit growth.
What better to expect from a portfolio that was devoid of commodities!!
With the benefit of hindsight bias, the Three mistakes of 2016 were-
1) The 'Not to be' Big Bet- A business is about to be demerged into two parts- (a) This segment is leader in consumer durables & has been sold to a PE player which will give open offer at around Rs 100/- per share. (b) Has power, industrial etc segments & is not losing money. How much of portfolio to allocate to this if stock comes to (i) Rs 100 (ii) Rs 120?
This should have been a big big bet (15-20% portfolio allocation) at Rs 100 & also, should have taken 5% or so allocation at Rs 120. However, when it touched Rs 120, I kept waiting for Rs 100 & hence, fully missed the 100% upside that followed next.
Never Wait for Absolute Bottom, Keep SIPing downwards in stocks with strong fundamental bottom, as long as fundamentals don't change.
2) Not touching The Untouchables- 2016 was the Year of the supposedly Untouchables- Paper, Sugar, Metals, PSUs & even few Chemicals. Having happily ignored most of these in the past years, I chose to do the same in 2016 & as a result, missed the big run in these names.
3) The Longgg Term Thinking- When Black Swan strikes, you run for cover. Market did same in case of NBFCs, MFIs & Real Estate. Despite holding a few names & being clear of near term hit, I chose to hold these with belief of being long term investor, hence missed a great exit & later, great prices for re-entry.
******************************************************************************
2017- Based on my limited thinking, 2017 (at least first 2-3 quarters) looks to be tough. DeMo impact on earnings, not so cheap valuations, FII selling, GST hit in near term should prevent Indices to move up a lot. Hopefully a good Budget & DII fund flow should prevent a big downside.
But can't rule out the unexpected as 2016 has taught us.
Thanks for the informative article! waiting for your next post commercial papers
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