When Markets Turn

When I entered the financial industry as a young professional, India was just emerging from the balance of payment crisis, the overall confidence in the market was hit by the securities scam, and economy was still in the early stages of liberalisation.

- Nilesh Shah

I saw the beginning of the IT era in the stock market—when a new relatively unknown company (then), Infosys, hit the market with its IPO.

As an investment professional I saw India undergo major political turmoil with four prime ministers in four years (1995-1998). I saw Indian economy get relatively isolated by the economic sanctions in 1998, and then there was the Kargil war in 1999. I saw severe droughts in early 2000s, with the 10 year yield spiking to more than 12 per cent level. I also saw the dot com bubble burst. I also witnessed the rally of 2003-2007 and led my team through the very troublesome 2008. Then of course the world saw QE I, II, III, the EU credit crisis, the Arab spring, the QE withdrawal related volatility and many more such events.

In this entire 25-year period, the equity market, despite all the odds, the whiplashes, the volatility and the gloom dooms, gave a pretty neat 11.4 per cent return Y-o-Y. And many of the fund managers of my time beat that performance by a margin, which will make the gods of investments like Warren Buffet and Peter Lynch proud.

What I have learnt is that the world will continue to swing at its own good pace. That the markets will remain unpredictable in the short term, and there is no replacement for knowledge, hard-work and skill. It may happen so very often that luck comes into play, especially in the bull market when even a speculator, a new entrant, or even a novice can outperform many well established fund managers; but only to that extent.