Make Volatility your friend, to create long term wealth.

Posted By: Admin

The word Stock market  is always associated with uncertainty & unpredictability. 

Yes, it's difficult to predict and we don’t know in which direction the market is going to move. 

In history no one has predicted the market accurately. 

We  will be happy when the market is on an upward movement and when our portfolios are showing good profits. 

However when the stock market goes down, it will make us question our decision to invest. Most of us will  start our own research on the market and as well as we will start getting other’s opinion on why the markets fell. 

We also start checking what our friends are doing and how the experts are predicting the market, esp in the media, television & newspaper. 

All this makes us nervous and robs us of the peace of mind in the investing experience. 

However there are ways to overcome this sense of nervousness. 

  1.  First of all, we need to set our own expectations on our investments. When we are investing  for long term then why should we worry on temporary fall, continue to stay invested ;  
  2. It is very difficult even for stock market pundits to  predict  the near future  in  equity markets,   because markets might be reacting for many reasons, be it domestic  as well as Global, so we need to stay away from trying to predict the short term movements of the stock markets. 

Historically there have been many reasons for market crash/ market movements :

1992 – Harshad Mehta scam sensex went down by more than 50%;

1999 – Market was considered to be record high. Sensex crossed 5000 in history for the first time;

2004 – 2nd Jan 2004 index hit 6026 which was record high;

2004- 17th May the BSE fell by 15.52%;

2005 – Sensex crossed 9000 points due to heavy purchase by foreign investors;

2006 – 18th May 2006 the BSE sensex fell by 826 points from 11,391;

2007 – Sensex rose from 10,000 to 20,000 points in Dec. There were many falls happening  in between;

2008 – Market crash happened. on 21 Jan 2008, the BSE fell by 1408 points to 17,605 leading to one of the largest erosions in investor wealth;

2010 – Sensex crossed 21000;

2015 – Sensex crossed from 29000 to 30000 for the first time;

2016 - 16 February 2016, the BSE had seen a fall of 26% over the past eleven months;

2016 – 9th November Demonetisation, market fall by 5.90%;

2020 – Sensex dropped from 42,273 to 28,288 due to COVID 19;

From the above data we can say that for every drop there is another historical peak.  Every four years the market is crashing for some reason. But at the same time,  every four years the market is also reaching an unexpected peak. From the above incidents we can conclude that when we go through the pain of market fall there would be significant returns waiting for us. But we need to go through a painful decline. 


We have seen a market crash happen for many reasons. Either it might be a political or government decision and pandemic whatever be the reason, the market has always bounced back. Those who have redeemed last year due to the market crash would have not participated in the current rally. Volatility  is the nature of the market. Whenever we see such volatile markets,  investors should be patient.Investor wealth will get created through the journey of  crashes and rallies. So be a long-term investor, invest in good funds, hold it for the long term and do not worry about market volatility.  


Safe Harbor : The views expressed herein are those of the author and not that of Finsherpa investment Services. Investments in mutual funds are subject to market risks, readers are advised to read the scheme related documents before committing their investments. The past performance of the schemes are mere indications and do not guarantee the future outcomes. Neither the principal nor the return in investments are guaranteed. 


By Bhuvaneswari

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