Happy Year In Equity With Passive Investing

2023 has been a happy year for equity markets, it was also a good year for passive investing.

Another year has gone by. It has certainly been an interesting year in general and also in equity markets.

Here is an article talking about some of the things that impacted markets in 2023.

This was the year chat gpt became common usage, I am now using it to do my basic analysis. The graph in this post is drawn by chat gpt4, based on the data provided by me.

Coming to Equity markets. The indices moved quite handsomely through the year.

There were two flat quarters and two quarters with approx 10% gains. There is no way for us to know in advance which is which. Thereby underlining the importance of staying in the market. If you stuck it out all through the year, then you would end up with a sweet 18%+ YoY return.

Remember this is passive, index investing.

Through 2023, segments of the market have performed better than the Nifty 50. Both small caps and mid caps have done a lot more.

Here is how my own portfolio did through the year.

The US part of my portfolio which is largely RSUs and the S&P500 has done much better than the India part. That has helped me shore up the overall equity component.

The India part of the portfolio has done reasonably well too. Especially the momentum strategy (pre tax returns of 45%).

My asset allocation is now at 44% equity because of the rally in equity markets seen in 2023. I have been adding to the debt part of my portfolio this year and it now makes up 21%. RE is still too high at 30%, hopefully equity will grow over the next couple of years and help me get to my ideal distribution.

Gold has done really well through 2023. I don’t have enough of it in my portfolio right now, so it is still at 2%, well below my desired allocation of 5%.

As a passive retail investor I would say 2023 has been a good year. I have sat on the sidelines of the big jump in small caps but I am not complaining. To my conservative mind it is looking like bubble territory, I am ok to continue missing out.

2023 was also the year Charlie Munger passed away. This quote by Munger sums up what I feel very strongly about the ability to do well as an investor.

What happens in 2024

Looking ahead to 2024, I will continue investing any surplus I generate in to the Nifty 50 & next 50. I will try to shore up gold investments through the RBI sovereign bonds. The Bank Nifty is another index that I am bullish about and will continue to add to that as well, whenever I can.

I am not adding anything to my Momentum allocation, I will let it continue to grow and not withdraw from it either. From the time I have invested in Momentum to now, it has done a little better than the Nifty 50. My expectation is that Momentum should generate much higher than market returns.

The most important thing for me is that I spent very little time this year in investing. 2023 was my first year of investing with my desired level of passivity.

I read a lot about what is happening in the market and about investment strategies and principles. This was to improve my understanding and develop my investment philosophy.

My active involvement in buying stocks has been minimal. To generate 18%+ returns with little to no involvement is the way I would like this to play out. Of course it depends entirely on how the market is performing.

Here is an article with some forecasts for 2024

2024 promises to be an interesting year, looking forward to it.