It was the best of times, it was the worst of times.

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair.” – A Tale of Two Cities

The above quote may have been about the period leading into the French Revolution, but it still rings true today. We live in an age of extremes:

The progressive nature of modern society and the impact of the pandemic on setting back equality: wealth, education, health, and gender etc;

1. The polarisation of wealth: rich men in space and the poor struggling on earth;

2. The beauty of technology and modern ideas as well as its addiction and issues over mental health, labour force and privacy;

3. Stock market highs as well as certain industries/businesses going permanently under, etc.

While all these points are worth exploring in greater depth, the focus of today’s thoughts shall centre on the 4th.

Since last year, the markets have pretty much been on a one-way street, with many breaking all-time highs, while underlying economies have been impacted by the various effects of the pandemic. Many people are anticipating the correction/reality check. In our opinion, it is hard to pinpoint when this will happen, it could happen today, in a few months or even next year. But when it does, how might one react.

“Everyone has the brainpower to make money in stocks. Not everyone has the stomach.” – Peter Lynch, considered to be one of the greatest investors in modern times.

While it may certainly feel like the best of times now (investing wise), around the time of our inception in September 2018, India experienced its “Lehman’s moment”. IL&FS, a large financial entity, defaulted which led to a liquidity squeeze and sent the markets into a tailspin. The Indian market had already been in the midst of a downward trajectory, which had started early 2018 and didn’t stop until 2020.

It did not seem like the most auspicious of starts, but it was largely thanks to this bearish period that we built up a lot of our base, averaging into the market at these relatively lower prices.

This will be the second time that I have emphasised on the lessons of averaging into the market. But that is how important and unfortunately how ignored this concept is. For sure, it can feel lonely and disheartening to be swimming against the tide and seeing red against your portfolio for extended periods of time, but that is where the discipline comes in and keeping an eye on the true intrinsic value and structural story.

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