The Curse of Momentum
1) Year 2021, saw an unprecedented Bull Run
2) All and sundry knew it was a Liquidity fuelled Bull Market
3) Markets raced up even before one could blink an eyelid
4) Funds scored big and investors missed out a significant portion of the Bull Run
5) The momentum was set
6) Fund Houses launched NFOs one after the other
7) The 2021 NFOs had gigantic record collections
8) Demat Accounts opened like never before
9) Behati Ganga mein sab ne haat dhoya
10) Wasn’t it known that once we enter post Covid Stage and People step out into the real markets to meet their pent up demand, the unwinding of accumulated liquidity would take place causing demand led inflation
11) Inflation causing Interest Rates to rise leading to slowing down and even a reversal of Equity Market Momentum
12) Even Housing Finance companies ne Behati Ganga Mein Haat Dhoya
13) Low interest rate fuelled mortgage sales grew and how
14) Imagine selling long term debt on the basis of short term interest rate opportunity (It can’t get worse but without Financial Education people will continue commit financial harakiri)
15) Can those who have been indulging in such practices at the cost of investors ever forgive themselves and lift themselves up?
16) This was all done in the name of fiduciary responsibility????
17) Less than a year down the road the Party is Over
18) New Investors would have seen massive erosion of their Hard Earned Money
19) Today they would be sitting at perhaps a 10% Negative Returns if not more
20) Who is to blame?
21) Is it the fault of the AMCs, the Distributors who chose to sell Equity without considering Asset Allocation and Rebalancing or the Investors themselves who chose to offer a deaf ear to earnest guidance???
22) Blame can’t belong to any single entity here
23) It has to be shared by one and all who practiced momentum based investing strategies
24) Lack of Financial Education, Greed on the the part of stakeholders including Investors are the root cause
25) MFDs who sounded caution, practiced conservatism were scorned at by those who were being served with appropriate guidance
26) Investors became experts at that time when the momentum was with the Bull
27) Greed prevailed all over and all sage advice fell upon deaf years
28) Nobody believed that markets would ever correct
29) Liquidity based Bull Market was seen as the advent of a perpetual utopian era of returns (This time is Different)
30) Stories of Sensex reaching 100000 prevailed in every nook and corner
31) The smart investors offloaded their risk and distributed it amongst small investors
31) And History once again was repeated
32) Today we sit on the cusp of a double whammy inflationary attack caused by higher demand and lower supply due to the unexpected Russian Ukrain war
33) At best markets can be expected to move in a sideways direction in 2022
34) And at worse, brace up for even more correction
35) No wonder the Dynamic Asset Allocation Fund algorithms are still advising caution and are sitting largely on debt
36) Advisors and MFDs who practiced Asset Allocation & Rebalancing during the greed fuelled Bull Market can proudly hold heads high now
37) And one hopes realisation now dawns upon those investors who had questioned their acumen less than a year ago
38) These are actually good times to invest in Equity Markets but most investors are running scared
39) Those who were ruing the loss of the Pandemic Opportunity, need to now realise that the Markets have once again come knocking at their doors
40) Equity unlike other Asset Classes invariably gives investors a second chance if not a third
41) Thanks to Market Volatility
I rest my case
