Good morning and a very happy republic day greetings.
Tightrope walking. The saying is that
” you can safely walk the tightrope without falling down for 10 minutes. But you cannot do the same without an accident for 10 years”
This is a reality. Even when you climb up or down the stairs in your office or home, over the years, there would have been occasions when you would have slipped or fallen down. It is a different matter whether you had an accident or not.
In spite of having accustomed to the stairs, you still slipped. The reasons could be many varying from. over confidence, tension, carelessness, not paying attention to wet or slippery stairs.
But in spite of this, you continue to use them and reach your intended destination.
Like wise, in investing to create wealth, you will have some accidents, however careful you are. There can be risks
a. systemic risk which is applicable to whole of the market or
b. Unsystematic risk, which due to a particular company or sector.
A typical example of systemic risk is the crash of the markets in 2008 and this was a global phenomena. However strong the fundamentals of the company you invested, your net value came down crashing.
A typical example of unsystematic risk would be that of satyam or for that matter Dotcom bust in 2000.
This affected a specific company or a sector.
But life goes on and if you are there, you would have made more money. Given below is the chart of three companies Infosys, Martui and HDFC bank, from three different sector, where they have gone through the tightrope walking, have had accidents and yet created value.
This is true of mutual funds also. Many good funds have given great returns for those who stayed the course.
This is just to remind you that good times and bad times do come and mostly together and more importantly they don’t last for ever.
Your attitude, and mindset determines who you are what you get.
Have the right attitude and enjoy investing.
For any clarifications, please feel free to contact me \\