Lessons learnt in 2025 — a perfect topic for a crisp Monday morning, never mind the late-December chill that I am sure you have all enjoyed after Christmas. For those who had started this calendar year with a set of die-hard fiscal resolutions, the subject is absolutely important. The year-end, after all, gives us a fair chance to judge progress and recalibrate our measure of success and failure. Did we make enough these past 12 months? Did our stocks, bonds, real estate and commodities create sufficient wealth? Did we deviate from our financial plan or dip into our emergency kitty or correct some grave errors midway?
The market — I refer to the equity space in particular — has taught us this year, beginning with the most obvious lesson — small caps. These, as many investors have lately learnt the hard way, have once again proved how terribly risky they are. And the lesson imparted: no one should expect these to forge ahead every time. I just might add that the past year, as the latest figures indicate, saw the most representative small cap index deliver a negative 5 per cent. That is a stark contrast to its five-year positive performance of about 30 per cent.
Having stated the obvious, let me work out a quick list of lessons that the investment world has imparted. The past 12 months have acted like a reality check for all investors. Remember, this is not to suggest that returns did vanish altogether. No, but these did become uneven and sporadic in a manner of speaking.
Lesson one
The market is not the index alone, it goes way beyond.
One of the sharpest things that discerning investors have picked up concerns the broad, popular indices. There remains a clear disconnect between what these have delivered and what most investors have actually achieved. Look at the Nifty and the Sensex, the two most quoted benchmarks, and you will get a fair idea. There is a huge swathe of stocks with flat or negative scores. So the difference between headline indices and real ground-level performance is as clear as daylight.
This difference, to be brutally honest, will appear embarrassing for certain professional money managers who swear by active management. Passive investment styles, especially where there is no need to outpace the index, have their charms — and this has been quite a year for many passives. There is a lesson of sorts for ordinary investors here.
Lesson two
Concentration, as the famous saying goes, is the riskiest bet of all. If we had only equity in our portfolio — that is to say, specifically no room for gold and silver — then we have probably ended the year on an unhappy note.
Yes, investors this year did learn a lesson or two with regard to these precious metals. Silver is a major surprise, its price has scaled newer peaks in the past few quarters. The buzz in the market is that the shiny metal is set to go north, and so many investors are clinging on to it. Others are expected to step up allocations to silver. For the second lot, exclusive silver funds now appear as a compelling proposition. Incidentally, there is a nuanced product category with only gold and silver. Absolutely no equity, and no fixed-income either.
Lesson three
SIP is no magic spell. The concept of SIP in 2025 has worked all right, as it does every time, every season, every year. The lesson, however, is that the idea does not guarantee anything. An investor who had initiated an SIP when valuations were peaking did see certain phases marked by stagnation. Such an investor should, therefore, train himself to spike his SIP-oriented dreams with realistic views.
There are, in fact, three “sub-lessons” (read: smaller lessons):
I will conclude with an age-old homily that everyone is familiar with. The markets tend to reward discipline and routine. Excitement (read: instant over-reaction) is generally not the answer. As I had mentioned earlier, the past year has served as a reality check — use it as a spring-board.
This is also an occasion to tell ourselves that liquidity can disappear faster than we think. Ordinary investors should never take it for granted. We should further be aware of other basic realities — not all smart ideas will suit our risk profiles. The perfect investment theme, when probed, may not seem so infallible. And remember, not all stock tips should goad you to buy, not all narrative-triggered rallies are worth your time, not all buzzing social media prompts are genuine.
Let 2026 be a great, purposeful year for all.
Nilanjan Dey is partner, Wishlist Capital (ARN-84929)