PLAYING WITH FIRE

It’s intriguing how life often weaves connections in unexpected ways. My own journey into the world of finance began during my college years, guided by my father’s warnings about overvalued markets. Little did I know that this introduction would eventually lead me to the unique experience of navigating the 2020 bubble. My journey began at the start of covid and the 2020 bubble, a pivotal moment when I decided to do CFA after becoming a doctor. This transformative journey has since led me on a path that has culminated in the creation of our own fund. Now, as we witness what appears to be the
concluding stages of another speculative bubble, it feels as though a circle is drawing itself closed.

As we observe various events unfolding around us, it’s hard not to draw parallels with the economic climates of the past, such as those of 1929 and 2000. In response to these observations and my own experiences, I feel a moral responsibility to share my knowledge and concerns about the perils of investing in a bubble. History has shown that every bubble, when it bursts, wreaks havoc on economies and investments. It is, therefore, prudent to exercise caution when market exuberance is at its peak. Of course, I readily acknowledge that predicting market movements is an elusive endeavor. It’s entirely possible that we may not be in a bubble, and prosperity could continue indefinitely. However, let’s set aside these predictions, as history has proven them unreliable. Instead, let us focus on what has endured as a timeless guiding principle in investing: valuations.

In times of exuberance, fundamentals often take a back seat as investors become captivated by hype and speculation. Yet, it is in these very moments that the wisdom of sticking to the fundamentals becomes paramount. Regardless of market conditions, seeking value and sound fundamentals has consistently proven to be a prudent approach for long-term investors.

Admittedly, finding value in the current landscape can be a challenging task. While I sincerely hope that my concerns turn out to be unfounded, prudence suggests that we exercise caution.

– Dr.Siddarth K.J

Fund Manager

Kyng Capital Management Pvt Ltd