Equities always gives positive returns?
Had a great discussion today with a friend (Bahubali) who is a firm believer that equities always gives positive returns no matter what. Well I do agree but it is so subjective to when you enter and exit the market.
As humans, we remember things of recent past and tend to forget what has happened in the long past.
The data point that is taken today is usually from 2009 onwards( most common benchmark) and certainly when returns are calculated for that period it shows phenomena returns. However we should not be selective on that data point. Today, with technology it's very easy to look back long in history and see what happened. I have tried to higlight some long bear markets that have existed in the past.
If we take todays discussion into that time, dare anyone would have said equities always gives a positive return. The fear and frustration at that time( living that time) would be so high that most of the people would have said :
1. that it would have been great if I would have invested somewhere else like real estate, commodities, or bank deposits
2. I should have redeemed some time ago when I was making good returns
3. Markets are manipulated ; "Yeh kisi ka saga nahi hai"
4. and what NOT... People who have seen at least full bull and bear cycle, can easily resonate to it.
Now as the time goes on and markets continues to go down or sideways, people/investors/traders start loosing patience and runs away from the market. These are the typical times when markets finds a bottom - less crowd and high fear
So to summarize I believe that we should not blindly believe in this theory that equities will always give positive returns. It is completely dependent on when you enter the market and when you exit. Before and after that it's just a game of numbers and unfortunately "when we read and plan we are not invested", when we are invested we don't plan". People who entered the market at or near the beginning of bear markets which lasted for couple of years would know this and understand better.
Bears don't come with a bang but once they have a grip they don't let it go so easily. I can smell them.. Are they around?
SPX
DJI
As humans, we remember things of recent past and tend to forget what has happened in the long past.
The data point that is taken today is usually from 2009 onwards( most common benchmark) and certainly when returns are calculated for that period it shows phenomena returns. However we should not be selective on that data point. Today, with technology it's very easy to look back long in history and see what happened. I have tried to higlight some long bear markets that have existed in the past.
If we take todays discussion into that time, dare anyone would have said equities always gives a positive return. The fear and frustration at that time( living that time) would be so high that most of the people would have said :
1. that it would have been great if I would have invested somewhere else like real estate, commodities, or bank deposits
2. I should have redeemed some time ago when I was making good returns
3. Markets are manipulated ; "Yeh kisi ka saga nahi hai"
4. and what NOT... People who have seen at least full bull and bear cycle, can easily resonate to it.
Now as the time goes on and markets continues to go down or sideways, people/investors/traders start loosing patience and runs away from the market. These are the typical times when markets finds a bottom - less crowd and high fear
So to summarize I believe that we should not blindly believe in this theory that equities will always give positive returns. It is completely dependent on when you enter the market and when you exit. Before and after that it's just a game of numbers and unfortunately "when we read and plan we are not invested", when we are invested we don't plan". People who entered the market at or near the beginning of bear markets which lasted for couple of years would know this and understand better.
Bears don't come with a bang but once they have a grip they don't let it go so easily. I can smell them.. Are they around?
SPX
DJI
