My Investments and Returns: April 2024 - March 2025

 My Investments and Returns: April 2024 - March 2025

The Ground Rules

Alright, folks, I’ve borrowed some of Warren Buffett’s genius ground rules from his famous letters—like borrowing your rich uncle’s best suit! I’m serving his wisdom with a sprinkle of my own goofy charm. Why? Because if you’re going to copy, go for the guy who buys companies like I buy snacks! Get ready for simple, Buffett-style tips that’ll make you feel like a money wizard—or at least fool your friends into thinking you are. Joke’s on them when you start sounding smarter than a stock market squirrel! Let’s roll!

1. When we talk about yearly gains or losses, we mean market values—how our assets are valued at year-end compared to the start of the year. This may have little to do with realized results for tax purposes in a given year.
2. Whether we do a good or poor job isn’t measured by whether we’re up or down for the year. Instead, it’s measured against the general performance of securities, like the S&P BSE Sensex (India’s benchmark stock index), leading investment companies, or other yardsticks. If our record beats these benchmarks, it’s a good year, whether we’re positive or negative. If we underperform, we deserve the tomatoes.
3. While I prefer a five-year test, I believe three years is the minimum for judging performance. It’s certain we’ll have years when our performance is worse—perhaps significantly so—than the S&P BSE Sensex. If any three-year (or longer) period produces poor results, we should consider other places to invest our money. An exception would be three years during a speculative explosion in a bull market.
4. I’m not in the business of predicting general stock market or business fluctuations. If you think I can do this—or that it’s essential to an investment program—you should turn to so-called pundits or gurus who claim to perform magical tricks.
5. I cannot promise results, but I do promise that:

a. Our investments will be chosen based on value, not popularity.

b. We will minimize the risk of permanent capital loss (not short-term price fluctuations) by ensuring a wide margin of safety in each investment and maintaining a diverse set of commitments.

c. I have virtually my entire net worth invested in the Indian stock market.

My Performance in 2024–2025

The S&P BSE Sensex experienced significant volatility between April 1, 2024, and March 31, 2025. On April 1, 2024, the Sensex closed at 73,903.91. It reached an all-time high of 85,978.25 on September 27, 2024, gaining approximately 16.3% in price terms from April 1. Assuming a dividend yield of 1.2–1.5% for Sensex companies (based on historical averages for 2024), the dividend-adjusted return during this period was approximately 17.5–18%. By March 31, 2025, the Sensex had declined to 75,496.52, reflecting a sharp correction from the September peak. From the starting point, the price index advanced by about 2.2%. With dividends reinvested, the total return was approximately 3.4–3.7%.

The Sensex’s modest 3.4–3.7% dividend-adjusted return was driven by a strong rally to 85,978.25 in September 2024, fueled by global market optimism, significant foreign institutional investor (FII) inflows, robust corporate earnings, and domestic economic stability. However, the decline from October 2024 was triggered by massive FII outflows of Rs. 86,100 crore in January 2025, driven by elevated U.S. Treasury yields, a stronger dollar, slowing domestic growth, weak earnings, global trade tensions from U.S. tariff policies impacting IT and metal sectors, and profit-taking after the September peak.

My Report Card

My portfolio wasn’t immune to this turmoil. I sold some shares and averaged down the price of others, maintaining a focused portfolio. I believe in concentrating investments, so I’ve invested in just four companies, each representing roughly 25% of my portfolio. This allocation isn’t exact but gives a rough idea of my approach.

While my portfolio experienced volatility, it outperformed the Sensex’s 3.4–3.7% return. My focus on undervalued stocks with strong fundamentals and a margin of safety helped mitigate losses during the October 2024–March 2025 correction. Specific returns will be shared in a follow-up post, but I’m satisfied with my performance relative to the benchmark.

Current Market Situation

Despite the sharp decline from the September 2024 peak, most of the downturn occurred between January and March 2025, driven by U.S. tariff tensions. Many investors, especially newcomers, believe we’re entering a bear market. I disagree. The market remains overvalued—the Sensex’s P/E ratio at March 31, 2025, was approximately 24.5, above its historical average of 20–22. Many blue-chip companies with large market caps have P/E ratios exceeding 50, and some even surpass 100, implying unrealistic growth expectations. Mid-cap companies are similarly overvalued, with P/E ratios often above 40.

New investors, particularly those who entered post-COVID recovery, have unrealistic expectations, assuming markets will always deliver double-digit returns. They’ve forgotten a fundamental principle: “In the short run, the market is a voting machine, but in the long run, it’s a weighing machine.” Short-term price movements may deviate from fundamentals, but over time, prices align with intrinsic value.

My Style of Investing

My portfolio is focused and tightly invested. I believe 5–6 stocks are sufficient for optimal returns, balancing diversification with conviction. Over-diversification dilutes returns and spreads attention too thin. I select companies with strong fundamentals, reasonable valuations, and a wide margin of safety to protect against permanent capital loss.

My Predictions

As previously mentioned, the market remains overvalued. Any negative news—whether related to U.S. tariffs, FII outflows, or political instability—could hit the market hard, not because the news is catastrophic, but because valuations are stretched. New investors, behaving like speculators, are fueling volatility. However, I remain optimistic about the long term. Quality companies with strong fundamentals will weather the storm and deliver value over time. My strategy is to hold steady, avoid knee-jerk reactions, and capitalize on opportunities during corrections.

Stay tuned for more updates, and happy investing!