A string of crises

Since February 2020, the world is seeing a seemingly never-ending stream of crisis. Here's a recipe for investors to move ahead with confidence.

- Dhirendra Kumar

 There are decades where nothing happens; and there are weeks when decades happen." That was said by Vladimir Ilyich Lenin, one of the founders of the USSR.

There's also an ancient Chinese curse, 'May you live in interesting times'.

Note that this is a curse, not a blessing. As we have all (re) discovered since March 2020, living in overly eventful times gets more than a little stressful. What makes it worse is that the stream of alarming events does not appear to be stopping. This year, as COVID has been winding down, we get the war in Europe; rampant global inflation, along with the attendant threat of higher interest rates; civil unrest created by economic disasters in dozens of countries, including our neighbourhood; and now the idiotic provocation of China by the US establishment over Taiwan.

Frankly, it's a somewhat scary time to be an investor. I guess it's a scary time to be anything but our brief in this magazine is to talk about mutual fund investing alone, so I'll stick to that. March 2020 looks so far back in time; it really was a different world then in many ways. In the investment world, I have always said emphatically that people who say 'this time it's different are often wrong and now I'm saying that the world is a different place! So, which is it?

The answer is simple, and the same as it has always been. The circumstances are different, but the principles are not. For things to be genuinely different, we would have to be in a situation where investing in bad companies would make more sense than good companies. It would have to be a situation where diversification would have stopped making sense. It would have to be a situation where always investing in a lump sum would make more sense than an SIP. I can assure you that kind of a time has not arrived, and nor will it ever arrive.