Filmy Finance Lessons, to recap a 2022 of high drama Authored by Radhika Gupta,MD & CEO at Edelweiss Asset Management Limited (EAML)
Data can be a funny thing; it conceals as much as it reveals. The NIFTY was up 4.3% in 2022, and this tepid sounding 4.3% does a good job masking the drama that investors witnessed in 2022. A sharp crash in tech stocks which were the darlings of the last decade, the different shades of Putin and Xi, and a revisit of the inflation monster were just a few of the events that kept us on our toes. For a new investor, all you had seen was the dream run post-COVID (of 2021), 2022 was a little bit of a rude shock. The short-term market movements elicit the movie fan in me. Movie dialogues make for great metaphors for such times, couldn't resist penning down to a few to summarise the lessons of 2022 – definitely a filmy year – with some quotes from the ages.
“I’ll have what she’s having” elicited more than a few chuckles in When Harry Met Sally decades ago, but it ended up having not so amusing consequences for investors. If there is one lesson, I have said young investors need to learn across all my sessions, it is SKIP THE FOMO. I have asked many investors, piqued by cryptocurrencies, exactly why they want to invest in the asset class, and 75% of the times, the answer was, “My friend made a lot of money in XYZ coin…”. Investing has become increasingly social but investing in something because your friend or neighbour or random person on Instagram did it, is usually a bad reason. Invest in what you understand and invest for yourself.
3 Idiots is as timeless as they come, and it’s never a bad time to remember the lines, “Kaabil bano, kaamyabi to jhak marke peeche aayegi” (Try to become Capable, Success will chase you), especially in the context of the IPO market. In 2021, the unicorn had become the country’s favourite animal and founders’ new heroes, with investors rushing to pour money into these new age listings, often of brands they were very familiar with. Traditional metrics like P/E and profitability went for a toss, until 2022 struck and the listings came a cropper. The IPO market is just readying itself for 2023, and this time, it’s important to ask the tough questions, and focus on basic fundamentals because when there is business value, valuations will follow.
I don’t think I’ve written about movies, without skipping an SRK film, who taught us a beautiful lesson in ‘Jab Tak Hai Jaan’, when he told Katrina Kaif, “Har ishq ka ek waqt hota hai. Woh hamara waqt nahi tha par iska yeh matlab nahi hai ki woh ishq nahi tha” (Every love has its own time ... that time was not ours ... but that doesn't mean that we were not in love). 2022 was a year when trends changed. Growth stocks gave a long overdue way to value, as PSUs and old economy names made a comeback, and international funds and markets to domestic ones. A lot of investors asked and continue to ask, should I move from growth to value, international to domestic? Well, the good investor knows, that every strategy and asset class has its time, and bad times don’t make investment approaches and asset classes bad. Holding power is a superpower.
The Joker’s “Why so serious?” from The Dark Knight has created countless memes, but with the rise of financial influencers over the last few years, investment advice got a little too ‘not serious’. Anyone with a following could write a viral IPO thread on Twitter or get lakhs of views with a catchily YouTube video. The perils of taking advice from just about anyone unravelled this year, and SEBI is correctly looking to regulate financial influencers. I am not suggesting that everything social media is bad, but money is serious business. You don’t take advice on a heart surgery from a YouTuber, do you?
From YouTube back to Bollywood, I love Raaj Kumar’s oh-so dramatic lines in Saudagar, “Hum tumhe marenge… lekin woh bandook bhi hamari hogi aur waqt bhi hamara hoga”. This was India’s year of winning and as our External Affairs Minister Dr. Jaishankar told the foreign media, “Doing things our way and articulating things our way.” At a time when recessionary fears hit US and Europe, India, now the 5th largest economy, emerged as an oasis of hope, despite not spending our way out of COVID, like our Western counterparts. New India is ‘the confident India’. And speaking of New India, how I can end without acknowledging the person who said, “Main Udna Chahta Hoon, Daudna Chahta Hoon, Girna Bhi Chahta Hoon, Bas Rukhna Nahi Chahta?” (I want to fly, I want to run, I even want to fall...I just don't want to stop).
That’s right, the retail investor, who aspires to create wealth, who struggles and falls also, but who doesn’t stop those SIPs, which are now a powerful collective 13,000 crores a month of domestic capital and a force that doesn’t stop, even when foreign capital does.
Happy investing in 2023.
Disclaimer: Radhika Gupta, is the MD & CEO at Edelweiss Asset Management Limited (EAML) and the views expressed above are her own