MyWay Wealth Weekly Update (Issue #9): The life cycle in businesses, profitability secrets & more

When Charlie Munger and I buy stocks – which we think of as small portion of business – our analysis is very similar to that which we use in buying entire businesses.

–Warren Buffett

With elections right around the corner, many investors are worried about the volatility that this season brings along. Here’s how the exit polls are looking:

State Exit Poll Expectation
Madhya Pradesh

BJP & Congress neck-to-neck
RajasthanStrong expectations for Congress crossing majority mark
ChhattisgarhBJP & Congress expected to engage in a very close battle
TelanganaTRS expected to retain power
MizoramThe Mizo National Front is projected to defeat the Congress Party

While we may not be able to predict the election outcome, we definitely can take a look at what has been happening every election season in the past.

Here’s an interesting perspective to how markets have reacted during the pre-election and post-election seasons in the past 38 years (10 General Elections).

SENSEX in the past 38 years (10 General Elections)

Now, the sharp-eyed would ideally ignore the data cosmetics around the dip and spike during election years and focus on the growth of SENSEX over the same period that witnessed 10 general elections of the World’s largest democracy!

SENSEX, a passive bellwether index, grew at a comfortable 17% CAGR (Compound Annual Growth Rate ) for the period Jan 1980 – May 2014; in other words – INR 10,000 would have grown to INR 20.25 lakhs in May 2014 & INR 30.23 lakhs as on 8 Dec 2018!

Equity, at a very basic level, is nothing but a part of a business and businesses do not come and go with elections. Businesses are here to stay, grow and create wealth.

The best way to go about with investing is in a disciplined and patient manner. There are two steps that one must remember – and this will help mitigate volatility and create a profitable portfolio:

  1. Start investing at the earliest; even now works.
  2. Do not touch it unless absolutely necessary

Here are few real cases that illustrate the profit proposition offered by long-term, disciplined investing in Mutual Funds.

Investment Period: 01 Dec 2000 – 30 Nov 2018
Monthly SIP: INR 10,000

Fund Name Investment Amount
(INR.)
Total Corpus
(INR.)
Annual Returns
(%)
Reliance Growth Fund21.6 lakh 2.05 Cr
21.85%
Franklin India Prima Fund21.6 lakh2.01 Cr
21.62%
HDFC Equity Fund21.6 lakh1.70 Cr
20.10%
ICICI PruMulticap Fund21.6 lakh1.36 Cr
18.13%
You can start investing in Direct Plans of Mutual Funds (with zero commissions and zero fees) by installing MyWay Wealth on Android or iOS:

 

 

While a week is too short to even classify any movement as an observation, sometimes it just helps to stay abreast of the important happenings that have made a difference recently.

Events in last week that affected marketsFund news:

  • ICICI Prudential Mutual Fund announces discontinuance of fresh Investment via any mode in Monthly Dividend option of ICICI Prudential Balanced Advantage Fund with effect from 3 PM on December 19, 2018, till further notice.
  • Axis Mutual Fund has decided to remove exit load from Axis Corporate Debt Fund with effect from December 03, 2018. Earlier, this fund was charging 0.50% if redeemed within 6 months.

If you have any concern, please write to us at ask@mywaywealth.com or call at +918048039999, we would be happy to answer your query.

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