Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Archive for the ‘General’ Category

Extreme patience

Posted by Muthu on February 12, 2019

To make money from equities, not just patience, but extreme patience is required.

Even last piece I wrote on patience. I’m continuing with the same. Why?

Patience is the most difficult virtue to develop. As I’ve said before, the origin of the word patience means suffering. To be patient is to suffer.

By nature, we try to avoid pain. But nothing worthwhile is ever achieved without going through pain.

Markets may not give any returns for three years and give three year returns in the fourth year.

Gains are never linear but always lumpy.

Markets can test our patience to the extreme. Only those who are able to bear the same are rewarded well.

Investors who are impatient seldom make money from markets.

Those who are with us for long are still seeing good returns.

Those who have become clients in the last few years are staring at bad returns.

Things will definitely change. Over a ten year period, the results would be good.

I cannot predict when markets would start going up. All I know is, in a decade, you would have more good years than bad years and the overall results would meet your expectations.

I can motivate and handhold you. But it is you who need to develop the required virtues.

Stay the course with faith. You would be amply rewarded.

Posted in General, Muthu's Musings, Stock Market | 1 Comment »

Need of the hour is patience

Posted by Muthu on February 4, 2019

“The biggest thing about making money is time. You don’t have to be particularly smart; you just have to be patient.”- Warren Buffett

Though broader indices may not say so, for all practical purposes, for majority of stocks we’ve been in a bear market.I saw a fund manager presentation. Only 21% of BSE 500 stocks ended positively in 2018. The rest 79% have given negative returns.

Debt market has also not been doing well for more than a year.

So be it equity funds or hybrid one like balanced and MIP, returns have been abysmal.

We know that 70% of the years, it is bull markets and only the balance 30% is bear markets. Still time moves very slowly in bear markets. Our patience and discipline are severely tested.

It is normal to be impulsive and impatient. That’s why it’s very difficult to make money in the markets. Only the few who are disciplined and patient ultimately makes it big from the markets.

All you need to do now is to simply the stay the course. Looking at portfolios can be painful. So I would suggest not to look at them till market recovers. Rain or shine, good or bad, I send yearly reports with my comments in April every year. It is generally a good thing to look at your portfolio once a year. More so in the negative market conditions like this.

There are many people who predict what would happen before or after elections. It is simply their opinions. May or may not happen. You know that I don’t make short term predictions.

The government is aiming India to be a $10 trillion economy in 2030. We’ve lot of foundations already in place. India is definitely a structural long term growth story. When we move from $2000 per capita to say $8000 per capita over next twelve years or so, lot of companies would do very well. As an equity holder, you would be reaping those benefits.

Keeping bigger picture in mind is the only way to withstand the short term pain. You’ve invested in equities with belief in a better tomorrow for the country and corporate India. Stay with that belief. I don’t know what would market do based on pre-poll opinion polls and election results. It is both difficult to predict events and market reaction to those events. All I can tell you is, whenever you’re in a bear markets, a bull market is always around the corner.

Maintain discipline. Stay patient. All would be well.

Posted in Economy, General, Muthu's Musings, Stock Market | Leave a Comment »

13th Year

Posted by Muthu on January 1, 2019

Wishing you and your family a wonderful 2019.

I’ve made it a practice to write on the first day of every year.

After quitting employment in December 2006, I formally got into this profession on 1’st January 2007.

This is our 13th year into the profession. I’ve been evolving a lot both as an investor and an advisor. You’ve been part of this journey and I am proud to note that there are very few emotionally matured investors like you. Only a small percentage of investors can manage their behaviour and emotions well. Those who do that are the one who create wealth from markets. I’m glad that you’re all part of this tiny minority.

For the last two years, we’ve stopped taking new clients except if it comes as a strong referral from anyone of you. We’re fine with where we are now. We want quality time to be made available to you as and when required and I also enjoy the free time the current bandwidth offers.

I’m financially independent and contented with our present state. I don’t want to increase the quantity, there by affecting quality. Time is finite and there is no point in spending it by chasing more and more growth.

I want to be always of assistance to you in managing your financial affairs. I want all of you to build good wealth and also preserve the same. Getting rich is difficult and remaining rich is most difficult. We’re there to guide you both in creation and preservation of wealth.

2017 was a great year in terms of return and 2018 was bad on the same. There is no way to avoid bad years. I’ve no clue how 2019 would be. All I know is there are more good years than bad and staying invested for a decade or more creates good wealth.

It would have been a great pleasure to see the portfolio in 2017 and painful to see the same in 2018. Pain, even though temporary, is the price we have to pay for long term wealth creation.

Nothing worthwhile in life can be achieved without some amount of pain. It holds good for wealth creation from markets as well.

Focus on your life going through the pleasure and pain it offers. Leave the investment part to us. Avoid looking at portfolio frequently. The emotional roller coaster you would go through by constantly looking at markets is not worth it. There are better things to do in the finite time available on earth. We would continue to do yearly review for you, which is more than enough. Investors for whom market is not the profession, yearly portfolio review is good enough.

I wish that 2019 be good to you and your family. Once again best wishes for a wonderful year ahead.

Posted in General, Muthu's Musings | 2 Comments »

Less pain and some gain

Posted by Muthu on December 16, 2018

I’m writing to you after 50 days. I wrote to you multiple times in September and October when markets had a steep fall.

After I wrote last piece, markets have been in recovery mode.

This is true for both equity and debt markets as well.

Overall this year has been a rough one.

As I repeatedly point out, 10% fall once a year, 20% fall once in couple of years and 30% fall atleast once a decade is unavoidable.

For many portfolios, this is a year of 20%+ correction.

Nobody loves to see the portfolio value going down. But this is the price which has to be paid for long term growth.

In most aspects of life, nothing worthwhile can be achieved without some amount of pain and sacrifice.

The very fact you set aside money today for investing shows that you sacrifice some part of today for a better tomorrow.

In equity investing, seeing your wealth going down, though it is temporary is the pain you’ve to go through for building long term wealth.

The only way to avoid pain is not to invest in equity at all.

By avoiding pain you would not have any gain as well.

You’ve all chosen equity fully understanding the pain and sacrifice that needs to be undergone on the journey towards achieving long term life goals.

Good advice never changes however repetitive and boring it sounds.

Just continue to stay the course remembering the long term results are always good for those willing to undergo short term pain.

Posted in General, Muthu's Musings, Stock Market | 1 Comment »

Pain continues

Posted by Muthu on October 27, 2018

Your portfolios are going through pain due to this bear market. There is no way to avoid this pain. In fact this is the unavoidable price you’ve to pay for getting good long term returns.

My continuous mentoring is to make you emotionally ready and bear with such pains as and when they occur. All good things in life never come without some pain. We’ve often heard that no pain no gain.

Though it is difficult to predict, some generalisations are possible. Bull markets are usually long and bear markets are short. Around 70% of years markets perform positively. This year is one of those 30%.

If returns are linear and predictable, everyone would get rich. But we know only 1% can be in the top 1%. If you want to build wealth through markets, need to accept this roller coaster ride and lumpy returns.

The question naturally comes to mind is how long this bear market would last. If we can predict that successfully, we can time the markets and completely avoid pain. By now, being our client for many years, you know this is not possible. Markets can recover in few months or may even take a year or more. We always advice not to time the market but invest when you’ve money and redeem when you need money ensuring a minimum time period of ten years in between.

Good advice rarely changes and so I’m repeating what I always keep repeating. How you behave in bear markets decides your investing fate. If you sell during bear phase, you’re converting notional loss into permanent one. If you stop SIPs, you lose the opportunity to acquire units at lower price which would actually boost your long term returns.

Only those who have control over their emotions get and stay rich. For others it is a loser’s game. We want you to be amongst successful tiny minority.

What you need to do for being successful? Just bear with the pain and stay the course. That is all you need to do and this one thing differentiates between success and failure.

Remember bear markets are always followed by bull markets. This is the time to accept and live with pain for long term gain.

Avoiding pain is avoiding growth.

Interestingly accepting pain actually reduces it.

This is time for you to experiment and see.

Experience coming out of experiment is wisdom.

And it is the wise who ends up successful.

Posted in General, Stock Market | 4 Comments »