Exactly 60 days ago, the Sensex touched 39,000 points on 28th August 2018. Since then a series of bad news, more so globally, including the rising geopolitical tensions like rising Crude prices and interest rates in US, these have had a downward sentiment on Indian stocks leading to the SENSEX closing at 34,400 (31st Oct). A drop of 11.79 % in the past 2 months in absolute terms. This means that the markets have shed almost all the gains over the past year.
This comes at the back of almost 4 years (on 26 May 2014, on the eve of Prime Minister Modi's election) the SENSEX had closed a shade short of 25,000 points, even at the peak when it touched 39,000 points, the overall return to the investor was 11% per annum (XIRR) and now when the SENSEX is even lower, the overall return is less than 7.50 % per annum (XIRR).
We know from past experience that Indian Stock markets deliver a long-term average return of 15 % per annum. So, we are at 50% discount to the long-term average. It is true that current global negativity and uncertainty over domestic elections later this year are keeping the markets weak. But it is precisely in weak markets is where the seeds of the next bull run are sown.
While it is fearful to invest in these times, when the markets are volatile and can easily trade down another 5-10% from these levels, if one were to take a long-term view and look at the big picture and a 5 year view… how wrong can you go in expecting a BIG upside from these levels?
As Jack Canfield said EVERYTHING YOU WANT IS ON THE OTHER SIDE OF FEAR.
So, go forth and stay invested, and if need be, increase your investments. Don’t let the fear blind you from seeing the Opportunity.
As Warren Buffett said, let us be fearful when others are GREEDY and be GREEDY when others are FEARFUL.