Posted By: Admin
Most people who we speak to are of the opinion that the Equity markets appear expensive. There are enough experts out there who are predicting the next big crash to happen. Especially since data shows that global inflation rate is rising and therefore interest rates are likely to follow suit and then large investors ( Foreign Institutional Investors) would pull out of the equity markets and therefore leading to a Crash in the Market. And they are also probably right. However should I be worried and not invest in Equity funds?
Over the last 40 years , there have been many excuses for not investing in Equity Assets.
1980-1982 - Worst recession in 40 years, debt crisis.
1983 - Market hits record - "Market too high".
1984 - Record U.S. Federal deficits.
1985 - Economic growth slows.
1986 - Dow nears 2000 - "Market too high"
1987 - The Crash -Black Monday.
1988 - Fear of Recession.
1989 - Junk Bond collapse.
1990 - Gulf War, worst market decline in 16 years.
1991 - Recession - "Market too high"
1992 - Elections, market flat.
1993 - Businesses continue restructuring.
1994 - Interest rates are going up.
1995 - The market is too high.
1996 - Fear of Inflation.
1997 - Irrational Exuberance.
1998 - Asia financial Crisis.
1999 - Y2K.
2000 - Technology Correction.
2001 - Recession, World Trade Center Attack.
2002 - Corporate Accounting Scandals.
2003 - War in Iraq.
2004 - U.S. has massive trade & budget deficits.
2005 - Record oil & gas prices.
2006 - Housing bubble bursts.
2007 - Subprime mortgage crisis.
2008 - Banking & Credit crisis.
2009 - Recession - "Credit Crunch"
2010 - Sovereign debt crisis.
2011 - Eurozone crisis.
2012 - U.S. fiscal cliff.
2013 - Federal Reserve to "taper" stimulus.
2014 - Oil prices plunge.
2015 - Chinese stock market sell-off.
2016 - Brexit, U.S. presidential election.
2017 - Stocks at record highs, Bitcoin mania.
2018 - Trade Wars, rising interest rates.
2019 - India GDP at 5 %
2020 – Covid 19 Pandemic
2021 – Stock Market is too High….
As the wordings in the Billy Joel Song goes “we didn’t start the fire, it was always burning since the worlds been turning “.. there will never be a perfect time when one can invest into Equity markets. I Am sure that there will be crashes and Corrections in the future too. . no doubt about that.
But the Sensex since 1980 to 28th May 2021 has moved up 500 times and delivered an annualized return of 16.26% ( Jan 1980 : 100pts, May 2021 : 51422pts ). Even taking the worst crash in recent times ( March 2020 : 28000 pts ), the annualized return of Stock markets works to 15.02%.
So while no one can predict the future, if we give our money enough time and not be worried about the short term fluctuations, you will create wealth over the long term.
You have a choice,
Stick with your excuse for not investing in Equity and miss the bus on wealth creation ; or
Invest into Equity Assets, but ride the wave of volatility and end up with good wealth in the long term.
Choice is yours.