Calendar 2018 was a very testing year for Dalal Street.

Investors in midcaps and smallcaps bled profusely.

Largecaps, with exception of a handful of stocks, have also gone down.

This is normal.

Equity returns are not linear.

Equity as an asset class does not give steady, regular returns. Calendar 2017 was a year of super-normal profits.

On a two-year timeframe, investors have still made positive returns.

It is recency effect and availability bias which play their tricks with our minds and make us feel that market has let us down! I will not hazard a guess on what market will be like in 2019.

Not because I don’t want to, but simply because I don’t know how to.

I know at this time of year, it is fashionable and probably expected to prognosticate about next year, but I will refrain from that. Instead let me talk about a few important things that we should keep our eyes out for. First, let’s talk about elephant in room and get it out of way - general elections.

Historically, Indian market has had large swings immediately before or after general elections. However, if we have a two-year view, elections and their results don’t matter much.

In 2004, Nifty went circuit down post-elections, and yet market went on to have a great bull rally for next three years. Exactly, opposite happened in 2009.

The market went circuit up and then did not do much for next two years. In US elections, when Trump won, markets were expected to crash, yet they rallied.

Recently, in state elections, ruling party lost in three major states, yet market went up instead of falling as was generally expected. I would argue that not only is it not possible to figure out election results, but it is not important to do so for investing. Next is US-China trade war.

It is something which is too difficult and complicated to be able to infer implications.

One thing in India’s favour is that most of India’s economy is domestic consumption-driven and not dependent on either US or China. Oil prices can destabilise our economy to a great extent.

How they behave in 2019 and beyond needs to be on our radar as investors, because they can impact currency and interest rates.

We, as a nation, need to start actively looking at renewables and at reducing our dependence on oil imports.

Calendar 2019 is a year as good as any to get started on this. Job creation in age of increasing automation is going to be an ongoing challenge.

India needs to be able to support its huge population with jobs.

We are in a peculiar situation with scarcity at both ends of spectrum.

Industry doyens keep talking about unavailability of employable people.

On other hand, our youths have no jobs.

Should we be focusing on vocational training instead of trying to push everyone to get a graduation degree What about quality of education being imparted at various levels While these have nothing directly to do with equity investing in 2019, tackling these problems by an enterprise can provide long-term mega-themes. India is a $2.5 trillion economy today.

At current pace, we should double in 8-9 years and then double again in another 8-9 years.

In this while, market cap should also go up substantially from current levels, because a lot more of large unlisted players would come to capital markets through IPOs. At a 100% market cap-to-GDP ratio, we are looking at an approximately $10 trillion market cap in 16 to 18 years.

That is a five-fold rise at market level in this time frame.

Individual stocks will definitely do much better.

So, keep an eye for longer-term wealth creation stories, be invested in a well-chosen portfolio of stocks and fasten your seat belts for a bumpy ride.