MoneyWorks4meMarkets have a way of testing not just our investing prowess, but our character.
Almost all the long-term investors have heard the phrase: “Investing is a marathon, not a sprint.” It sounds sensible. Rational. Easy to agree with.
And in good times, it feels effortless.
When markets are rising steadily, portfolios are compounding, SIPs are working beautifully and optimism is everywhere, everyone believes they are a long-term investor. Patience appears easy when rewards come quickly.
But the real test of temperament begins when markets stop cooperating.
When returns flatten.
When indices move sideways for a couple of years.
When portfolios do not reflect the effort, conviction or patience invested into them.
That is when the difference between a true marathon runner and a short-distance sprinter reveals itself.
The current phase in markets is one such testing time.
The Seduction of “Better Opportunities”
Whenever one asset class or geography underperforms for a period, a new narrative emerges.
Today, the seduction is visible in multiple forms:
- The AI-led rally in select US technology companies
- Enthusiasm around global themes and international diversification
- Growing admiration for China’s infrastructure execution and manufacturing dominance
- Cynicism about India’s pace of reforms and governance execution
This shift in narrative is not unusual. Markets amplify recent performance into grand conclusions.
The same people who were extremely bullish on India two years ago now wonder aloud whether India can truly deliver. Some believe the reforms are “more optics than substance.” Others point to rising crude oil prices, bureaucracy, infrastructure bottlenecks or uneven execution as reasons for pessimism.
But long-term investing demands something deeper than reacting to changing narratives.
It demands perspective.
Markets Move in Cycles. Narratives Do Too.
One of the biggest mistakes investors make is extrapolating recent performance indefinitely into the future.
When US markets outperform for some time, investors begin believing only US markets can create wealth.
When China grows rapidly, it appears unstoppable.
When commodities rally, “old economy” becomes the future again.
But history shows leadership across markets changes cyclically.
India itself has gone through periods of underperformance followed by phases of extraordinary wealth creation. Investors who stayed invested through the difficult phases benefited disproportionately when the cycle turned. In fact, it did well on a dollar adjusted basis over the last decade. Indian markets delivered approximately 13.5% annualized returns in US dollar terms over 30 years, placing India among the best-performing large markets globally.
Also, the Indian market is better diversified unlike some of the other markets that are pulling in investors. For example, South Korean Kospi Index is hugely skewed towards two stocks Samsung Electronics and SK Hynix accounting for as Reuters recently reported about 44% of the KOSPI’s total value. That’s betting on two companies not a country. And in Taiwan’s case it’s betting on TSMC. We are not suggesting you should or shouldn’t invest in them, but you should be aware of the risks in these decisions. In contrast Top 2 stocks account for 15 to 18% of Nifty 50. And while most currently performing markets are driven by Technology stocks, Indian market is well diversified across sectors.
The important insight is this:
It is difficult to create long-term wealth by chasing the latest winning narrative. And even when you do get great returns from such investments, it is even more difficult to retain the wealth created by continuing to ride the same narrative. Usually, the horse that takes a huge lead in a long-distance race like the Derby or Oaks rarely wins. The same is true in a marathon. And it’s easy to discount the ones that are gracing the back even though they are maintaining a good steady pace required to clock a winning time.
The good thing about investing is that you don’t need to pick one winner because everyone else is a loser. That would happen if you sold or reduced your India portfolio and put it in, say the US, South Korean or Taiwan market or the Semi-conductor ETF.
India’s Structural Strengths Remain Intact
Serious long-term investors must distinguish between cyclical problems and structural advantages.
India’s structural strengths remain significant:
- A large domestic consumption economy
- Strong entrepreneurial culture
- Formalization of the economy
- Expanding financialization of savings
- Digital public infrastructure at massive scale
- Growing manufacturing capability
- Rising middle-class participation in equities
- Deepening domestic institutional capital
Most importantly, India today is not dependent solely on foreign capital to sustain markets. Domestic flows through SIPs, retirement savings and retail participation have become a stabilizing force.
This is a profound structural shift compared to earlier decades.
Yes, Crude Oil Matters
India remains vulnerable to crude oil shocks.
Higher crude impacts:
- Inflation
- Fiscal balances
- Currency stability
- Consumption
It is a genuine macro risk and cannot be dismissed casually.
But investors often confuse a headwind with a derailment.
India has navigated oil shocks repeatedly across decades while still compounding economic growth and market capitalization over time.
Temporary stress does not invalidate long-term direction.
No growing economy progresses in a straight line.
The Psychological Edge of Long-Term Investors
The greatest advantage long-term investors possess is not superior intelligence.
It is emotional endurance.
The ability to:
- Stay rational during pessimism
- Avoid performance-chasing
- Resist narrative swings
- Continue investing during dull phases
- Hold quality businesses through temporary disappointment
This is where temperament becomes more important than forecasting.
Because long-term investors success rarely comes from correctly predicting the next hot market. It comes from participating consistently in long-term compounding while avoiding catastrophic mistakes.
The Real Marathon
A marathon is not difficult in the first few kilometres.
The difficulty begins later — when fatigue sets in, excitement fades and progress feels painfully slow.
Investing is no different.
The real long-term investors are not identified during bull markets.
They are identified during periods like these:
- when returns are muted,
- when alternative narratives look more exciting,
- when conviction feels uncomfortable,
- and when patience stops feeling rewarding.
That is when compounding quietly does its deepest work.
The investors who endure these phases thoughtfully — with quality businesses, reasonable valuations, proper diversification and disciplined asset allocation — are usually the ones who benefit most when the cycle eventually turns.
And history suggests that it always does.
Do you have investments in companies that have an Excellent Financial Track Record of over 10 years? Find a few such companies, and add them to your Stock Watchlist.
