If anything 2018 has taught us, it is on the futility of forecasting. Investors learnt once again, but in a more brutal fashion that forecasting is not the game any sensible investor should venture into. Investors who had structured their portfolios for a vigorous wobble in 2018, ended up facing an accident, esp. in the small and midcap space. Swings in many asset classes were so sharp that it wrecked much of the portfolios with no places to hide. Kudos to those investors who have survived 2018 and still have steam left to stitch together a promising portfolio for the coming months and years. Such is the mayhem in many asset prices.
Take for example, the rise and fall of crude prices. In late Oct, when crude was all set to cross 85$ mark, urge to forecast did not spare even the seasoned ones sitting in the swanky offices of Dalal street. One of the famous one, in his tweet, even ventured to throw a 100$ mark for crude just in few months. Of course, he was trolled later by twitterati when the crude crashed by 30%+ in few quick sessions, not long after his infamous tweet. The story is not much different when it comes to Rupee or the 10 year Gsec yield. Who would have guessed that 10 year would rise all the way from 7.15% in the beginning of year to 8.15%+ only to crash all the way back to 7.25%. That much for forecasting.
To top it all, fag end of 2018 is witnessing US markets behaving more like an emerging market in terms of sharp intra-day swings on growing noise on recession fears. This is another forecast that market participants are fearing which could put global markets on a rout. The still-fresh 2018 experience should guide the rational investors not to get swayed by such gloomy forecasts, but to stay focused on portfolio building with a keen eye on buying prices. This is not to suggest that recession fears have to be ignored. All it suggests is that no one knows for sure and it is impossible to predict macro given the large numbers of inter-dependent moving parts.
In hindsight, when one looks back one year down the line, one would realize that 2018 was an eventful year, not only for all the irrational swings, but also as one of those years that gave great entry points for long term believers in India story.
Wish you all a very Happy and Prosperous New Year!