Prediction and reality in 2025 and approach to equity investing in 2026

Picking up the threads from last fortnight’s column where I commenced a review of what I had forecasted via the medium of this column in 2025 with what happened in Reality (highlighted in Italics), let us continue the exercise …………. Though non-traditional, an emerging asset class that many young people are gravitating towards is cryptocurrencies. While I don’t claim expertise in cryptocurrencies, its acceptance as legal tender in some parts of the world suggests that the concept could grow, subject to regulatory approval. Given its extreme volatility though, tread carefully till then. (While I cannot honestly admit to investing in or even following this segment, from what I have read, it was even more volatile than ever during the year gone by). The highest profile, even if somewhat minimally invested, traditional asset class in India remains equity. The general consensus or shall we say apprehension is that a correction is round the corner. It may be so and those who believe it would do well to seek a switch to either safer debt instruments or equity offerings carrying lower risk by employing an inbuilt hedge mechanism. (This played out too with the mid-cap and small-cap equity segments ceding quite a bit of the gains of the earlier years). One can of course, also always take the view that historically most corrections have almost inevitably been followed by a rebound and hence, if one has no pressing near term need for the invested funds, stay invested. (I have largely done this through the three and a half decades that I have invested and been none the worse for it. In my opinion, it is a no-brainer actually and I believe that corrections are great accumulation and top-up opportunities.) With Indian equities ranking among the worst performing across global markets in 2025, there is a sense of gloom and doom projected by several ‘talking heads’ but it does not shake my time-tested belief that every year is a good year for equities. Some, like 2025 for accumulation and topping up one’s mutual fund portfolio to maintain and boost the compounding effect and some, like the prior four years for good returns where Indian equities ruled the roost. I for one, am not a believer in ‘Sell dear and Buy cheap’ as time and experience over three and a half decades in the market have taught me that it is only a mythical investor that manages to do so regularly. A lucky one off, maybe, but to do it consistently is well nigh impossible. What actually happens in most such cases is that the one who sells either finds the markets continuing to soar or if it corrects, keeps waiting for that most opportune moment to buy again, which never happens. Hence, I prefer to stick to the approach that has served me well over the years and am not in any hurry to revise it. (Ashok Kumar heads LKW India. The views expressed here are his own)