As 2025 draws to a close with the swiftness of a blink, investors are presented with a pivotal moment for reflection and planning. The first quarter of the 21st century is already behind us, marking 26 years since the Y2K phenomenon. This transition into 2026 is not merely a change in calendar but a critical juncture for your financial future, demanding deliberate action rather than reactionary moves.
The Futility of Forecasts and the Power of Contrarian Thinking
Financial expert Devina Mehra, Chairperson and Founder of First Global, begins with a stark warning: treat all annual market forecasts and "top stock" lists as pure entertainment. Historical data across global markets reveals these projections have absolutely no correlation with reality.
A Mint study demonstrated that expert stock picks often underperform the average stock. Similarly, a Bloomberg analysis of decades of US index projections from major banks showed they were off by an average of 15 percentage points.
However, current market sentiment provides a valuable clue. With pervasive talk of risks, and Indian equities ranking in the bottom 10% globally in 2025 returns, a sense of despondency has set in. Mehra points out that sentiment is a classic contra indicator. Periods characterized by fear, anxiety, and underperformance often precede above-normal returns. By this logic, 2026 could offer better prospects for Indian markets.
The Essential New Year Portfolio Review
The core of Mehra's advice is a disciplined, post-festivity portfolio audit. Investors must dedicate time to answer fundamental questions about their holdings across equity, fixed income, gold, real estate, and other assets.
First, assess your asset allocation. Does the current split between equity (direct stocks, mutual funds, PMS) and fixed income (FDs, debt funds) align with your financial goals and time horizon? If not, corrective changes should be implemented by the end of January 2026.
Second, conduct a ruthless equity cleanup. Scrutinize your Depository Participant (DP) statement and eliminate all "junk" holdings. The golden rule: if you wouldn't buy a stock at its current price today, you should not hold it. Clinging to losers in hopes of breaking even is a wealth-destroying strategy. The market is indifferent to your purchase price, and many stocks from rallies like the 2024 small-cap boom may never reclaim past highs.
The objective is singular: maximize portfolio wealth. This return does not need to come from the original underperforming stocks. Be clinical. Book losses and reallocate capital to better opportunities.
Building a Disciplined Investment Framework
Mehra urges investors to define their stock-picking criteria clearly. Are selections based on specific growth metrics, return ratios, and governance parameters, or on whims and tips? This introspection may lead to a vital conclusion about whether a do-it-yourself approach is suitable or if professional management is needed.
The most critical resolution for 2026 is to never invest out of Fear Of Missing Out (FOMO). Chasing yesterday's winning theme, sector, or asset class is a proven path to underperformance. Mehra cautions that the financial industry often preys on this impulse, with entities lacking relevant expertise launching products—like global investment options—simply to capitalize on investor FOMO.
In essence, successful investing is often boring. The core principles do not change with the seasons. For 2026, the mantra is to stay invested within your predetermined equity allocation (which should never be 100% of your portfolio), invest during gloomy times as a contra bet, and make deliberate, objective decisions. Step back from the noise, focus on your goals, and have a prosperous new year.
