VBS Group wishes all our stakeholders a safe and a stable journey through this Covid-19 pandemic. Though we all are aware and excited about the various vaccines being supplied to protect us and make our lives more normal, we should not forget the basic precautions we have been following for the past 12 months to avoid the dreadful virus. We have already seen a glimpse of what everyone is expecting from the future with a rally in almost all asset classes of investments globally. The country we live in or deal with has a significant impact on the level of optimism we have on our futures’.
Even with all the optimism surrounding us, we as a society still have our training wheels on post this pandemic and running towards a brighter future. Just like over pessimism can be a huge opportunity in financial markets, over optimism can also be a primary reason for the formation of bubbles that will burst. We believe that focus and discipline are two major factors that help us in taking prudent and practical investment decisions.
2020 – A year to remember, learn and prepare
Most of us have read, worked on, provided hypothetical solutions for various case studies in our academic lives (few of us are doing it for our kids or nephews or nieces). The core concept of a case study is LFOM / LFOE (Learning From Others’ Mistakes or Experiences) that helps all of us to experience or provide a solution for a hypothetical situation or a problem. This activity helps us not only imagine experiencing various situations, but also increases preparedness for many possible pitfalls in personal or professional life.
2020 has given us an opportunity to be a part of a historical once in a lifetime case study with many societal, political, scientific, religious, financial, technological and environmental disasters, milestones or achievements. Just like any other case study, it is our great responsibility to remember, learn and prepare for the future from this experience.
We as investment advisors try to remember the decisions taken by different businesses during 2020. Some businesses might have improved or lost due to various reasons but any decision taken during times like these are a litmus test in our opinion and paves way for a brighter or a bleaker future for the companies. We have a similar view towards governments for fiscal, political and economic decisions and central banks for monetary policy decisions.
We are completely aware that we are nowhere close to being completely knowledgeable about the economy or the financial markets which drives us to utilize this opportunity to learn how all these decisions taken by various entities work. Every decision has an expected result that may or may not be matching with the reality in future. This learning process helps us in making better decisions during tough times both in our personal and professional lives.
Many of us have seen great returns due to the V shaped recovery in our economy as well as financial markets in 2020. This was possible because of the learnings from past market crashes and economic recessions with respect to making investment decisions. We should be prepared for any future events like the ones we have experienced in 2020 with all our learnings.
The Indian Journey
India being the largest democracy (where decision making and implementation is not always smooth and easy) has relatively handled 2020 far better than many developed or advanced countries in the world. During any crisis, few good metrics to determine the level of success is the time taken for recovery (back to normalcy), relative level of human and economic loss and the opportunities created. In all the mentioned metrics, India has done a relatively exceptional job as a country and a society.
Many developed countries like the USA and UK are still battling and are behind India on the recovery curve in the above-mentioned metrics of handling a crisis. The death rate due to Covid-19 in India has been on the down trend since mid-September which is quite opposite to the global and advanced economies scenario. This downtrend has accompanied an uptrend in the economic activity (RBI projects economic downturn ended in India from October 2020). We were able to achieve both these without stricter lockdowns and fully accessible health care systems.
India has become a new alternative to China for many industries like Pharmaceutical and Specialty Chemicals in the past twelve months. India has developed an indigenous vaccine, approved another vaccine for distribution. India has developed a platform to potentially be a new spearhead for economic activity globally for the next couple of decades.
All these factors are driving global and domestic investor eyes to view Indian capital markets as a bright spot in the coming decades for economic activity.
A pat on the back
It is high time that all of us give ourselves and the people in our lives a pat on the back for surviving a dreadful year like 2020. It has been nearly a year since we saw lockdowns all over the world that made us rethink many things in our lives. We should feel brave and proud to have navigated and survived this pandemic without losing hope or confidence.
As investment advisors, we always give our clients’ needs a higher priority than the market conditions which has given us positive and disciplined results even in a year like 2020. A V shaped recovery is not the end of challenges for our economy and we still need to work united as a global society and hope all the other countries experience the success Indians have seen in handling 2020.
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