Markets at an all-time high but don't get swayed by the euphoria: Enam's Doshi

livemint.com:

Mint in detail about his perspective on the markets and on investing. Edited excerpts: The term "long term" has been misused in recent market runs. For traditional investors focusing on generational wealth through equities, long term means beyond three to five years.

Equities, as an asset class, allow for a compounding effect of value creation in the economy. For long-term investors, the biggest ally in wealth creation is time in the market. While many seek the perfect timing, a consistent, staggered approach towards investing in quality companies is key to sustainable long-term wealth.

Systematic participation through market cycles makes time your friend in this journey. The golden rule in investing and trading is to be cautious on the eve of an event. While 4 June will indeed be significant for India’s economic, social, and political future over the next 10-30 years, any euphoric or panic reaction should be viewed as a step in the long-term journey.

Yes, the market has run up recently, but even the historical bull markets of the 1990s and 2000s saw several corrections of 15-25%, which now seem minor in the broader market trend. Therefore, we remain opportunistic, using such market gyrations to invest during panic periods and staggering commitments when markets are strong. As bottom-up investors, we avoid predicting index levels.

The index is dynamic and has seen over 50% turnover in constituents over a decade. Historically, equities have returned close to 13-14% CAGR over two decades. At a minimum, we expect these returns to continue long term, driven by economic growth, earnings cycles, and a diverse investor base.