Big flames die fast: Lessons from 2025 for the investor in 2026

Subscribe to enjoy similar stories. Dear reader, as 2025, a year of global tumult and volatility, rolls by, Mint's reporters and columnists look around the corner on what is coming in 2026—to help you know what to expect and prepare for it. Tell us what you think at [email protected]. In 1912, the Titanic set sail with a level of confidence few machines have ever carried.

Engineers called it unsinkable. Passengers believed nothing could go wrong. That over-confident belief quietly shaped every poor decision: too few lifeboats, higher speeds, and a casual dismissal of warnings.

The ship didn’t sink because the iceberg was too big. It sank because the people steering it were too sure. That thought stayed with me while reviewing markets, asset class returns and the economy in 2025.

India’s long-term story remains strong. Real growth is healthy, and corporate balance sheets are cleaner than most global peers—and at their all time best. Yet, 2025 offered an important reminder: when we become too sure (of above average growth rates), we stop respecting risk (of valuations).

And when we stop respecting risk, we experience normal cyclical outcomes via lower returns. India continues to deliver solid real growth. FY25 came in at 6.5%, and FY26 so far has been even better with 8.2% real GDP growth in Q2 and 8.0% for the first half.

Let’s dig deeper. Nominal GDP, the number that feeds company revenues, taxes and earnings, has slowed. It was 9.8% in FY25, and the FY26 Budget assumes 10.1%.

This is very different from the 2000s, when nominal growth routinely touched 12–14%. Today’s reality is an 8-10% band. It’s a good number, when we see much lower growth in rest of the world.