Ten Things I Learnt This Samvat

Every Diwali, I try to pen down my key learnings over the last 12 months, in the Samvat gone by. It is the season of joy, of celebrations, and also of reflections. And reflecting while there is an uptrend in the market has some joy attached to it. As I celebrate our wonderful festival, I note down ten key learnings for me over the last Samvat. Here goes –

1) Patience is a virtue but can be a trap too.
-A lot of investing wisdom lays out the importance of patience. And rightly so. One cannot make wealth in investing if one does not have the patience to ride an earnings upcycle. However, the Samvat gone by was good for the hare and not for the tortoise. Markets were volatile, and people who were waiting patiently for the earnings growth at the start of the year had a rude external shock. Hindsight also shows that people patiently waiting for the markets to give cues about a reversal may not be able to buy now, because the Nifty rallied over 1600 points in less than 9 sessions. It becomes very difficult to buy after a ringing rally which one has missed out on.

2) The best-paid plans can go awry
- Indian investors, who were positioned in pockets that would benefit from lower crude prices and lower US yields at the start of the year, were caught on their feet, as geopolitics and supply concerns drove crude sharply higher (with Brent testing well above $100 and briefly nearing the $117 mark) while US yields remained elevated. The resulting pressure on India's current account, imported inflation, currency, and equity valuations turned what looked like a high-conviction, data-backed setup into a source of underperformance, until later partial easing in oil provided some relief. The episode underscores that even well-researched positioning remains vulnerable to external shocks that no forecast can fully price in. As Morgan Housel argues, ALWAYS account for the tail risk!

3) Stocks going for a song can keep going that way for long.
-For a really long time, the optimism around the valuations of Reliance, HUL, Biocon, HDFC Bank and a few others has continued. The argument has been that these proven large caps have consolidated enough and, based on earnings trajectory or potential inflows, are going for a song. But that tune hasn't changed in the last Samvat. The argument has not translated into returns. HUL's five-year returns are minus 19%, HDFC Bank is at minus 9%, Biocon is flat, and Reliance Industries has returned less than 5% in five years. It proves that stocks which are going for a song can stay that way for long.

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4) Leverage has a very sharp edge on the downside.
- The asymmetric risk of leveraged instruments can crush you out. Gains can be amplified on the way up, but losses compound far more destructively on the way down because daily resets, volatility decay, and the mathematics of percentage declines make recovery disproportionately hard. A classic illustration is the Leverage Shares 3x Long SK Hynix ETP (HNX3), which seeks three times the daily return of SK Hynix shares. While SK Hynix itself has experienced substantial volatility tied to the AI memory cycle, the 3x product has suffered far steeper drawdowns. Reports show multi-month or all-time declines approaching or exceeding 70–97% in periods of underlying weakness, because a sequence of negative days forces constant rebalancing that erodes value even if the stock later partially recovers.

5) Summer follows spring; during downturns, it is important to focus on evidence and attractive valuations rather than succumbing to fear.
Despite current stagnation, AI trade cooling, geopolitics, or oil concerns, he points to India's structural strengths (demographics, digitisation, democracy, local supply-chain shifts) and the availability of diverse companies at discounted prices. He advises looking for deals when stocks are cheaper, remaining enthusiastic rather than fearful in bear phases, and recognising that after difficult periods opportunities reappear. The broader wisdom: let long-term evidence of growth and value outweigh short-term noise and anxiety.

6) It's about earnings, earnings, earnings.
- This is wisdom imparted by Raamdeo Agrawal, who spoke to me at our Diwali event, Ignite, and urged investors to shut out the noise and look at the balance sheet. His core message is to ignore headlines, geopolitics, and short-term market chatter. What ultimately drives stock prices is corporate earnings growth and the quality of the underlying business. Focus on companies delivering (or poised to deliver) strong profit growth, regardless of market-cap labels or prevailing sentiment. The practical discipline - turn off the news and evaluate the numbers. A quick glance at the stocks that have delivered strong returns in the last 12 months of volatility suggests that there is strong merit in that argument.

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7) Most of a stock's (or market's) value sits in terminal growth, not the next couple of years of earnings.
-Ridham Desai spoke on my annual show 'Saal Mubarak', with him stressing that equity valuations are driven far more by what investors believe about sustainable long-term growth than by near-term numbers. When markets worry that growth may not last (whether due to AI disruption fears, demographics, or other factors), they can re-rate assets sharply lower – even if the current macro and earnings look solid. The practical lesson, according to me, is to focus on businesses and economies where the long-run growth story remains credible and durable, rather than chasing short-term earnings beats, because the turnaround, when it comes, may not give you the chance to execute your trade.

8) Identify multi-decade structural megatrends and stay with adaptable businesses as the opportunity evolves.
- The energy transition (reducing crude dependence, scaling solar + storage) is framed as a 10–20+ year theme driven by energy security, falling costs, and rising power demand. Profit pools shift over time (from modules to cells to wafers/integrated solutions and toward BESS for firm power). The practical lesson is to seek out companies that can effectively execute at scale, raise capital, navigate policy changes (e.g., ALMM), and expand into adjacent markets or higher value chains, rather than becoming overly reliant on a single short-term opportunity. Long-term winners are those that adapt as the TAM expands and requirements change from pure capacity to round-the-clock reliability.

9) Reading fiction has its benefits too.  
-This year, I loaded up on reading fiction books. For reality seemed stranger than fiction. And fiction reading provided a lot of joy from reading and also some perspective. Books like 'All the Light We Cannot See' and 'The Nightingale' reminded me that even in the darkest, most uncertain stretches of history - when the path ahead is obscured and the odds appear overwhelming - ordinary people endure, adapt and occasionally find light through patience, moral clarity and the quiet accumulation of small acts. That feels useful in markets too, for when the noise is loudest and the narrative turns bleak, the long-term compounding of disciplined capital often depends less on perfect foresight and more on the ability to stay present, keep reading the room (and the books), and resist the urge to abandon a sound process just because the present chapter is hard.

10) Go local, be kind.
- I re-taught this myself. There is charm in the old traditions being kept alive, like the lighting of the diyas (instead of just the lights), like the rangoli, like the exchange of Indian sweets, and more. More importantly, there is charm in buying things made by Indian artisans and paying them the top rupee for the produce. Enjoy the shopping, and contribute to the joy in the lives of those who are the local artisans during our biggest festival.

Happy Diwali, to one and all. Have a great time.