{"id":401242,"date":"2025-01-02T14:41:37","date_gmt":"2025-01-02T09:11:37","guid":{"rendered":"https:\/\/zerodha.com\/z-connect\/?p=401242"},"modified":"2025-01-02T14:58:16","modified_gmt":"2025-01-02T09:28:16","slug":"what-did-we-learn-3","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/subtext\/what-did-we-learn-3","title":{"rendered":"What did we learn?"},"content":{"rendered":"

It’s the end of another year. And that means it’s time to look back on the year and reflect on the mistakes that I made, and saw others make.\u00a0<\/span><\/p>\n

Why? I\u2019m not sure. It’s the height of arrogance to think we <\/span>learn<\/span><\/i> from our mistakes. I don’t know about you, but I\u2019m not one of those disgusting, smug people that actually <\/span>learn<\/span><\/i> anything. No, I like to wallow in my mistakes. The whole point of this post for me is to reflect on mistakes, find lessons to learn, ignore those lessons, and make new mistakes in 2025 \u2014 in style. I’ve been doing this for a few years, and it’s become something of a small tradition.<\/span><\/p>\n

So with that, shall we get to it?<\/p>\n

<\/span><\/p>\n

\n

Who knows why anything happens?<\/b><\/h2>\n

In all my recent posts, I\u2019ve talked about just how crazy the markets have been since COVID.\u00a0<\/span><\/p>\n

Since 2020, when the pandemic hit, the markets\u2019 worst year was 2022. And even <\/span>that<\/span><\/i> wasn’t a negative year \u2014 it was simply flat. The largecap, midcap, and smallcap indices generated 4%, 3%, and (-)4% respectively. Considering the bloodbath the US markets were seeing, this was barely a scratch.<\/span><\/p>\n

Then, 2023 was the opposite of 2022. It was spectacular. The largecap, midcap, smallcap indices, and gold all shot up \u2014 by 20%, 43%, 48%, and 14% respectively. Though I didn’t say this out loud <\/span>in my post last year<\/span><\/a> (because I am too chicken to publicly make predictions), I thought this meant 2024\u2019s returns would be moderate, at best.<\/span><\/p>\n

My non-prediction was spectacularly wrong. The Nifty 500 is up 16%. The Nifty Midcap 150 index is up 23%. The Nifty Smallcap 250 index is up 26%. Gold is up 20%. That’s a <\/span>brilliant<\/span><\/i> year, unless you think 40%+ returns every year are your god-given right.<\/span><\/p>\n

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It goes to show, once again: what you expect from the markets and what actually happens will almost always be the opposite \u2014 both on the upside <\/span>and<\/span><\/i> the downside. We should all stop pretending like we understand the markets.\u00a0<\/span><\/p>\n

Looking back at any year, it\u2019s easy to feel like you know exactly why the markets did what they did. But if the market was really that predictable, we\u2019d <\/span>all<\/span><\/i> predict it, and you\u2019d make no money at all.\u00a0<\/span><\/p>\n

\n

Everybody was a genius\u2026 again<\/b><\/h2>\n

For the second year in a row, it was hard to lose money. In fact, you couldn’t have lost money even if you tried.\u00a0<\/span><\/p>\n

And we <\/span>did<\/span><\/i>. We ran a test, picking 3 completely random portfolios of 30 stocks each from Nifty 100, Nifty Midcap 150, and Nifty Smallcap 250 index.
\n<\/span><\/p>\n

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Here\u2019s what we saw:\u00a0<\/span><\/p>\n