Gold and Land vs Equity

Shray Chandra and Deepak Shenoy’s discussion on how we treat gold, land very differently from equities.

Shray Chandra: But when I’m looking at my portfolio, if I’m going to put them all in equity, I’m this super demanding and difficult person saying this doesn’t deserve to be in my portfolio, it’s not doing well, I’ve lost faith in management, this sector is completely screwed.

But if 5% of that money is in gold, and gold doesn’t do well, I’m like, oh, this is fine, it’s meant to be hedge. It’s almost like I treat it completely differently. So when it goes up, I said, see, I was right.

And when it doesn’t do well, I said, yeah, I know, because it’ll do well at the other times. So how does one deal with this sort of like, is this a rational way of thinking about it? Is it just managing emotional expectations or is it like insurance? It won’t do well for many years and some years it will do well.

Deepak Shenoy: That’s a brilliant philosophical thought process difference. And I think real assets have this advantage. You buy land, you have a similar thing.

Land has this advantage that people don’t re-value it. And even if they do re-value it, they say, we’ll wait. People tell me that they want to wait for the metro in Bangalore before they sell their apartment.

I’m like, that’s at least three, four years away where I am. They’re like, huh, it’s okay. I’m like, nobody will tell me.

I will wait three, four years for Nifty to go back up. It’s very rare to find that, right? I have to try really hard to…

Listen, it’s not down too much. It’s only been a year. So just hang on for a few more years and it’ll be fine over the long term, right?

You have to give any investment at least a few years before it gets in. But it’s so much easier to tell that about land or about gold than it is to tell them about stock A or portfolio A or mutual fund Y and so on. So I feel that maybe it has become a second part of nature for us. It says, well, if this mutual fund thing doesn’t work out for me in a year, I’m done. But the land bit, I want to, I don’t mind. That is actually long term.

Shray Chandra: We’re able to bring in our long term thinking properly when it comes to or the diversification thinking when it comes to say assets like land, real assets. We struggle when it comes to financial assets where the job is, you’re supposed to make me rich. What are you doing?