Will Market Recover? Part II

Hello,

I hope you had a pleasant last week, and I believe you and your family are doing great. When the external environment is not providing any incentive to be happy let us find happiness in and around ourselves.

Now, let us take our last week's conversation forward

A quick recap:

1.     Some of the frequently asked questions about Market and COVID-19

2.     Lesson learned from 08-09 crisis

3.     Investors were divided into three categories and I am sure we all wished to be in category III.

Here is the link to the 1st article Will Market Recover? Part I (👈 Link|)

Today, let us discuss some big corrections of the last 10 years and the lesson learned

EURO CRISIS 2010: 

Jan 2008 Sensex peaked and reached 21206.77 and bottomed out to 7697.39 by Oct 2008, a fall of 63.7%

By Jan 2010 Sensex almost gained all the lost points and touched 21108.64 merely 98.13 points away from the Peak of Jan 2008, and that’s when the Euro crisis started.

It was commonly and wildly predicted this crisis would be worst than 2008 - 09 crisis.

However, the drop was not as extensive but the effect remained longer than the previous crisis, Sensex touched 15135 in Dec 2011 a fall of 28.28%

Sensex took approximately 4 years to reach the peak of 2010, Oct 2013 Sensex finally broke the spell or resistance that was created 2008 and touched 21321.53 

  

However, it was only March 2014 when Sensex finally broke out completely and touched a new (ATH) All-Time High of 21960. 

LESSON LEARNED: 

No Matter how tough the circumstances, time heals every wound and markets come back.

CHINA CRISIS 2015 AND BREXIT 2016

Feb 2015, Sensex touched 30024.74 and by Feb 2016 bottomed out to 22494.61, that’s a fall of 25.07% from its peak.

Adding fuel to fire created by the China Crisis, a referendum in the UK, voted to leave the European Union in June 2016. Media reports said that this is the biggest crisis the world has seen. Creating more panic and deepening the selloff.

However, in April 2017, Sensex recovered the lost ground and made a new ATH of 30184.22

LESSON LEARNED: 

No Matter how tough the circumstances, time heals every wound and markets come back. (Same like earlier)

LET US REMEMBER:

Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria. – Sir John Templeton 

We are neither in euphoria nor scepticism but surely amid pessimism, the birth of the bull market might happen sooner rather than later.

There is absolutely no way to prophesy the exact date and time, before the rally starts we might see Nifty PE drop to its all-time favourite crisis PE of 12.

The Pattern developing on the charts is shockingly similar to 2008-09. When we made a parallel comparison it blew our mind, will make an attempt to write a blog on it asap.

However, this time let us apply the lessons history has taught us. 

If we do not learn from the past, we are destined to repeat it. Unfortunately, one thing I have learned from History is people do not learn from History.

Let us make an intelligent choice this time, talk to your trusted advisor. Protect your capital and ensure you invest in a staggered manner, decide the levels you will get in and with what portion on capital before we reach that level. 

Next ten years might be the best years for you. 

BY FAILING TO PREPARE, WE ARE PREPARING TO FAIL

MY GOLDEN RULE

Every time broader markets correct by 5% or more, be brave and make an Investment.  Concluding this article, for now, do share your feedback, it will make us better.

See you next week. 

Till then, Safe Investing.