As Diwali approaches, it offers an important moment for reflection on wisdom over external delusion, and of sustained light over momentary sparks.
The festival of lights represents the triumph of clarity over chaos, a theme that closely parallels the principles of sound investing.
In an environment increasingly driven by speculation and the pursuit of quick gains, particularly through IPOs, these lessons hold even greater relevance.
This festive season calls for investors to bring focus and wisdom to their financial decisions, lighting the path within their portfolios with prudence and awareness.
In investing, the most common risk is not a lack of information but the tendency to follow the crowd. Nowhere is this more evident than in the current IPO scenario, a space once dominated by large mainboard offers but now increasingly defined by the speculative storm in SME IPOs.
The surge in SME IPOs has created a wave of listings doubling, tripling on debut; we hear whispers of staggering gains. A frenzy builds. Investors are motivated by fear of missing out rather than informed decisions. Many participate without understanding the company’s core business or governance framework, effectively turning investment into speculation.
Effective investing begins with self-awareness and courage to sit out this noise. It means recognising that your investment goal is long-term wealth creation, not short-term gambling. Investors must look beyond prevailing sentiment and avoid participating in offerings they do not fully understand or evaluate confidently.
LOOKING BEYONG LISTING GAINS
The excitement of a strong IPO debut can be tempting, but it is rarely an indicator of long-term success. The initial market response often reflects sentiment, not fundamentals.
Long term wealth is created after the listing, as the company executes its business plan and demonstrates consistent growth. The most successful investments come from holding quality companies over time, not from chasing short-term price movements.
Chasing IPO fireworks is a trader’s game, fraught with volatility and luck. The investor’s game is played with patience. It involves the trust in a business that you have thoroughly researched, and the discipline to hold it through market cycles, allowing its intrinsic value to compound. The real wealth in IPOs is not made by those who sell on listing day, but by those who, have done their homework, have the patience to hold a quality company for years.
BUILD A DISCIPLINED INVESTING FRAMEWORK
Just as Diwali is a time to reorganise and renew, investors should periodically reassess their portfolios and strategies. In the context of IPO investing, this means reviewing past decisions, identifying patterns of speculative behaviour, and strengthening focus on fundamentals
The “clutter” here is not just losing bets, but an undisciplined strategy. It is time to ask hard questions: “Did I get swayed by hype and over-allocate to speculative SME IPOs?” “Did I disregard fundamentals because the issue was oversubscribed 500 times?” “Have I built a portfolio of lottery tickets instead of a well-balanced temple of assets?”.
Knowledge means going back to the prospectus. It means reviewing the company’s financials post-listing, its use of proceeds, and its management commentary. It means having the wisdom to clean out the clutter of impulsive bets and reinforce the foundation with companies that have a clear path to growth and robust governance.
True prosperity in investing is not defined by temporary gains but by consistency, discipline, and informed decision-making. Markets reward patience, clarity, and adherence to fundamentals, not speculation.
When investors combine self-awareness to avoid herd folly, the patience to look beyond fireworks, and the knowledge to maintain a clean portfolio, they create the foundation for long-term financial growth. This prosperity is not the fleeting, speculative profit from a lucky IPO flip. It is the sustainable, growing wealth that comes from owning a piece of a genuine business, purchased at a sensible price, and held with confidence. It is wealth built in the democratic, regulated arena of the stock exchange, not in the opaque corners of pre-IPO or grey markets.
This Diwali, the message is clear: focus on clarity over noise, conviction over emotion, and patience over impulse. In doing so, investors not only strengthen their portfolios but also embody the very principles that define long-term success.