What 2016 taught us investors

No doubt, 2016 was an eventful year - with its own dash of surprises.

In fact it was a year which also had the ability to give us life long lessons - if we are ready to accept them.

For investors there could have been many events - big and small - which would have influenced their investing decisions but the three key events which comes to my mind and what we learn from them are enumerated below:-

The BREXIT scare - Before the event, investors across the world were made to think that Britain's exit from the Euro zone will mean disaster for the world financial system. Brokers and consultants received frantic calls from all and sundry as to whether the world financial market will come to a stand still! Of course, as it turned out, the 'Brexit' scare was unnecessarily hyped out of proportion. The Europeans still cannot do away with the 'me-important' mindset even though their role in world economy is shrinking year after year. Today except a few countries in the Euro zone, nobody even thinks of Brexit and its impact.

Learning:- for investors, this was a great learning. DON'T give too much importance to headlines and news - just remember that the media makes a living out of it.

The US elections was the second event which gave a surprise. An unlikely TRUMP became the President of the world's biggest economy. His speeches and statements have been far from exciting and more tilted towards amusing and it remains to be seen what he does in 2017 and later years.

Learning:- for investors , this was one more learning. Be ready for the worse - sometimes it does occur! Build your investment portfolio which can take such surprises in its stride.

And the third most impacting event was the De-monetisation , timed on the day when US election were announced. The Note ban in India created shivers down the markets. Investors still fear a slowdown of GDP and economic activity but all in all the general consensus is that it was a good step by the government to curb black money.

Learning :- for investors, this 'black swan' (once in a life time ) event gave an important learning. It made us realise that we are savers and investors 'by nature' and that our family (spouse , parents and children) are also smart savers. But more importantly, the cash-crunch resulting from the note ban has taught us to become 'smarter spenders'. We can spend less - if we really decide to. Just check your last month's expenses and compare them with prior months' and the learning is crystal clear.

Lets hope 2017 does not bring negative surprises and also lets hope we all do not forget the lessons of 2016.

CA Rajiv D Khatlawala