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.
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|
|Rajasthan||Strong expectations for Congress crossing majority mark|
|Chhattisgarh||BJP & Congress expected to engage in a very close battle|
|Telangana||TRS expected to retain power|
|Mizoram||The 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).
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:
- Start investing at the earliest; even now works.
- 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|
|Reliance Growth Fund||21.6 lakh|| 2.05 Cr||21.85%
|Franklin India Prima Fund||21.6 lakh||2.01 Cr||21.62%
|HDFC Equity Fund||21.6 lakh||1.70 Cr||20.10%
|ICICI PruMulticap Fund||21.6 lakh||1.36 Cr||18.13%
- 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.