Four easy steps to make 2023 profitable

moneycontrol.com:

Those who went by the 2021 craze for cryptocurrencies and international investing suffered because they went by past returns.

In 2022, investors saw why anything in excess is bad and how uncertainty is very much a part of our lives. It was a year of rising interest rates, high inflation and the meltdown in cryptocurrencies. The days of making quick money became a distant memory.

This is my assessment of how investors managed finances in 2022:

The good

Despite the roller-coaster ride Indian markets had in 2022, investor interest in equities continues to grow, with SIP inflows touching an all-time high in December. In my sessions, I find young investors keen to participate in equities and thankfully staying away from investment-linked insurance plans. It is good to see the focus on growing wealth and the ability to take on some risk.

The learnings

The excesses don’t last. From being up 58% in 2021 to closing 64% lower in 2022, bitcoin had a disastrous year. SPACs and Non-Fungible Tokens (NFT), which were booming in 2020, are practically dead. Stock prices of record smashing Initial Public Offerings (IPO) plummeted to all-time lows. All of this showed that supernormal quick returns do not sustain.

Stick to the basics: The 2021 IPO boom was derisive of traditional valuation models and bandied new valuation models based on potential over profitability. In 2022, things have come full circle, with profitability and use of funds raised for business purposes over rewarding early investors being the main criteria for choosing an IPO. Stick with the fundamentals.

Don’t gaze into a crystal ball: No one knows which way the markets will go. Despite macroeconomic concerns, Indian markets still ended positive. Will there be a recession in 2023