“Oh My God!! Did You see the Sensex?? It has crossed 47k!! These are all time high levels. I am getting scared. Looks like I should redeem all my investments.” Said Sameer, a 34 years Old IT Professional.
“Yes, it has crossed 47k. But what makes you scared? And Why Would you want to redeem?” Asked Niraj, his friend.
Sameer : Aren’t you scared ? This is an All-Time-High that the market has hit.
Niraj : No, I am not scared. And lets re-frame it. Its not “All-Time-High”. Its “Till-Date-High“.
Sameer : What’s the difference ?
Niraj : If you observe the markets from last 30-40 years, they have always been making higher tops and higher bottoms. So whenever people exited thinking it is “All-Time-High”, market proved them wrong by making a new high. Let me give you some examples :
1. In January 2000, The Sensex hit a high of 5721 and then it fell to 2600 levels in Sep 2001. Thus, when the markets again crossed 5721 and hit 6000 in Jan 2004, many people thought that this is an “All-Time-High” and sold their stakes, thinking that they will buy again when it falls below 5721 levels.
2. Unfortunately (or fortunately), the market did not fall. On the contrary, it rallied upto 21,000 points in Jan 2008. This was where the markets fell, but still the bottom did not touch the previous “All-Time-High”. It fell upto 8,966 points in Mar 2009 (way above the previous high) and from their it again started rallying. (The people who had redeemed at 6000 levels, came back at 8966 levels only to enter at a level 50% higher than the level at which they redeemed).
This time it grew and surpassed the previous high of 21,000 in Feb 2014. Many people again thought that this is “All-time-high” and sold their stakes, thinking that they will buy again when it falls.
3. Once again, they were disappointed. Because from there, the market again rallied till 41,681 points in Jan 2020 and then fell to 25,981 levels on 23rd March 2020. This bottom of 25,981 was still much higher than the top of 21,000 at which people had sold with the hope of buying back.
In all the 3 examples you see a common pattern.
A – Whenever market surpasses a previous top, people get scared and start selling with a hope to buy when it falls.
B – The Market falls, but it still falls at a level that is way too high than the previous top. So those who sold, re-enter at a much higher price than the price which they sold.
Thus, in my opinion, any such temptation to “time the market” should be avoided.
Sameer : Thank you so much Niraj. Many people were telling me to redeem and re-enter later. But you have showed with real examples that such attempts to “Time the market” can actually backfire.
Niraj : Right. Also, your purpose of investments in the market is wealth creation, not quick money. If the purpose is wealth creation, then stay invested and let the experts do their job. The Fund Managers are already booking profits on your behalf so that you can create wealth.
Sameer : Thank you so much Niraj. But I am still curious to know. How do you have all this knowledge with you ? We are working in same company and are of almost similar age. Still you have all this knowledge and not me.
Niraj : Its very simple. I have a trusted advisor with whom I am regular touch. He explains all these things coolly and calmly to me. You don’t have an advisor. You keep relying on TV Experts, Newspapers, Google and random friends who themselves do not have clarity on all these things. They think they are saving advisor fees, but it is costing them more by making such mistakes. Depending on such sources creates lot of fear and anxiety in your mind.
Sameer : This is So True Niraj. Please share the details of your advisor with me. Even I would avail his services so that I remain composed like you in these situations and create wealth for myself. Today I have learnt below lessons :
Our investment decisions should be based on our goals and not market levels.
Trying to time the market can backfire. Stay invested for long term.
Don’t follow the herd by listening to media advice. Have a Trusted Advisor.
We look forward to your valuable comments and feedback.
The Author Prof. Saurabh Bajaj(BE, MBA, FRM, CFGP, CIA, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.
(Disclaimer : The views mentioned in the article are personal opinion of the author. Mutual Fund investments are subject to market risks. Please consult your Financial Advisor before making investment decisions)
Prof. Saurabh Bajaj is an Author, Mentor, Motivational Speaker and Wealth Planner.
He has done his MBA from Narsee Monjee Institute of Management Studies (NMIMS) Mumbai, one of the top 10 management institutes in India. He holds the prestigious FRM (Financial Risk Manager) degree awarded by Global Association of Risk Professionals (GARP), USA. Till date, there are less than 15,000 professionals in the world, who have been honored with this degree. He has also been awarded CFGP (Chartered Financial Goal Planner) Certification by AAFM (American Academy of Financial Management).
After his MBA, he joined J P Morgan, the second largest Investment Bank in the world. He has worked with J P Morgan as Risk Analyst for more than two years.
Prof. Bajaj also holds an Advisory certification awarded by AMFI (Association of Mutual Funds of India). During his stint at Bombay Stock Exchange, he has handled Investment Management and Treasury operations of the BSE Corpus. He has set up an entrepreneurship venture in the field of Wealth Planning and Investment Consulting under the name “Nidhi Investments” and holds the profile of CEO.
Prof. Bajaj sits on the Expert Panel of CAClubindia.com and MBAClubindia.com as Investment Expert.
He is actively involved in investor education through his blog www.professorbajaj.com which has a readership from 78 Countries all over the world. His articles are also regularly published in caclubindia.com , mbaclubindia.com , totalca.com , charteredclub.com, bankbazaar.com and lawyersclubindia.com .
He has been awarded the title of “Best Article Writer” from caclubIndia.com in Jan 2012 and has been selected amongst “Top 5 Technical Writers” from all over India in Feb 2013.
He has been invited by various TV Channels like SPIN TV, CNBC TV18, UTV Bloomberg Etc for programs like "Expert Advice" , "What Markets Want ", "Budget Analysis" etc.
He has been invited by Several organisations like Lions Club, Rotary Club, Agrawal Welfare Foundation, Rajasthan Mandal, Agroha Vikas Trust, Union MF, UTI MF, Arthamitra Gurukulam, Vidyalankar Institute of Technology etc for expert lecture on "Smart Investing", "Life is A Celebration", "Financial Freedom", "The Digital IFA" etc.
He was ranked 8th Merit at All India level NMAT which got him selected for MBA programme at NMIMS, Mumbai. He did his MBA with Capital Markets as his specialisation.
Soft Skills has become an inevitable part of every selection process and teaching learning process these days. The students from small towns and tier II cities, in spite of being talented and well equipped with technical skills, are seen struggling in the selection process. This is because of their lack of exposure to these soft skills. Mr. Bajaj has a zeal for training candidates to develop these skills and has been imparting the same on since last two years. This zeal and passion inspired him to set up his own firm called “Knowledge Circle” which aims to train candidates for soft skills.
Till date, he has trained more than 5000 participants from over 220 organizations across various fields of soft skills.
He has been associated with MSBTE (Maharashtra State Board of Technical Education) to conduct Soft skills training workshop for the faculties of Polytechnic Colleges in Entire Maharashtra (Mumbai Region, Pune Region, Aurangabad Region and Nagpur Region) since last 8 years.
He has also been associated with ICAI (Institute of Chartered Accountants of India) for training CA Students on various topics related to Communications skills, Group Discussions etc.
He was invited by Fr. Agnel Polytechnic College, Vashi for a motivational workshop for faculties. He was also invited by Vivekanad Polytechnic College for "Communication Skills and Email Etiquette" training for non-teaching staff.
Apart from these, he has conducted “Capacity Building Soft Skills workshop for Faculties” at ITI Gunj, ITI Pusad, ITI Digras and ITI Umarkhed. This was the first ever soft skills workshop for faculties in the history of ITI’s in Vidarbha. He was also invited by Shivaji Education Society to conduct similar Soft skills workshops for the faculties and office staff of Shivaji Junior College Pusad, Shivaji High School Pusad, Shivaji Vidyalaya Belora and Shivaji Vidyalaya Bhojla.
He has conducted training workshop on “Effective Presentation Skills” for the relationship managers of HDFC Mutual Fund, Andheri Branch, Mumbai.
He has also been invited at College of Management and Computer Science, Yavatmal, College of Dairy Technology, Warud, B N College of Engineering, Pusad, B D College of Engineering, Wardha, College of Engineering and Technology, Akola, Dr.N.P.Hirani Institute of Polytechnic, Pusad etc. for the Guest lecture on “Developing Interview Skills”.
View more posts
12 thoughts on “Markets at 47K !! What to Do??”
After a long time Saurabh Bhai but as usual you hit the right spot of the Investor. Like most of the others, I too was thinking the same. You know the nerves of the Investor and treated them with your advice and clear the confusion.
Thanks and keep writing.
Thanks for the compliments Hasan.
You are right. This year, I could only write 2 articles. We had made few videos related to investor awareness which can be seen on our YouTube Channel https://www.youtube.com/channel/UC8h_26Pxnbjpe4uqjL02hNw .
But yes, articles have their own importance. Thus, I will make it a point to write at least 4 articles in an year.
Thanks again for your compliments and motivation due to which I wrote and completed this before the end of 2020.
Fantastic Article with Practical and Rationale Approach Bhaiya.
Thank You So Much For The Kind Words.
Very nicely explained by you (bajaj sir). During such ” till date high sensex” there is tendency of clients to get out of market asap, its a good reply.
Thank You So Much for the kind words.
Glad to know that you found it helpful.
Please keep sharing with your friends, family and Clients
Very nicely put in the right words. Prof Bajaj you always have something innovative ans simple explanations
Thank you so much for your kind words .
Good article sir, most of investors are confused markets are again fall (fear) very useful.
Thank you for your kind words Sir.
Nicely explained bhai..Investment guidance from expert advisor helps…
especially for people like me ..who are having financial goals but do not have much knowledge about market dynamics.
Thanks you for your Kind Words Bhai.
You are absolutely right. We are experts in our fields but not in all fields. Thus, for respective fields, having an expert guidance is always helpful.