Equity traders and investors have never had it better than the period between 2003 - 07. The benchmark indices of the Indian equity markets, Sensex and Nifty, gave an annual return of over 40%. It was almost unimaginable to invest in fixed income options and mentioning that you invest in these products was taboo.
Cut to 2008 and I can assure you investors in fixed income securities will be smiling smugly. And equity traders will say they did not 'listen' to sign of excesses, thus they blew up. Soon the stories of sold homes, cars and gold to repay leveraged positions will trickle it. The media will have a field day running these stories (I admit equating Dalal street to Mahalaxmi racecourse is fun).
Some introspection will reveal how much of the past success was luck. Obviously its hard to accept its luck and not skill and its even harder to segregate the impact of each element. But honestly i can say some degree of certainty this cycle will repeat again. The simple reason for this is the human tendency to get complacent when the going is good. Danger evokes caution, fear curbs the natural risk taking ability.
While i write this hoping equities will bounce back, i accept 2008-09 will be the years of fixed income securities. So let them enjoy this time and do not grudge their success, respect it, because it is built on caution, planning and patience.
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