With the benefit of hindsight all of us are great investors. We precisely know that we should have begun to invest when the markets bottomed at the height of the panic last November. Our current reality though is that we are sitting on cash and hoping for a market correction, while equity markets seem to be scaling new heights. If there is a key lesson in the global market crisis of last year it is that we have survived and are still able to earn, save and invest, while the rest of the world is still licking the wounds from the onslaught that threatened to become a full-blown depression.

It is quite natural for investors to believe that the matters that should concern them are how US deficits are moving up, how Japan may take longer to come out of recession, or understand the implications of government borrowing on the Indian bond markets. Many think that such analysis is a fundamental pre-requisite to managing their portfolios. The truth may be simpler. Investors perhaps need to spend more time on their own personal finances. If they find that their jobs, income and saving have not been impacted by the fury of what was happening elsewhere in the world, they were enjoying a beautiful diversification benefit — even if the local stock markets went crashing with the global markets. To have money to invest when the market offers an opportunity to do so is more valuable to wealth creation than scholarly knowledge of markets.

... contd.