If you were not around to see the -46% of 1993, but were around to see 2008, then 2011 would have looked quite bad. Seeing your portfolio shrink by 25% (worse if you did not have Bharti, but had more of Reliance!!)…and if you were a $ investor, it was worse. Including the 19% fall of the US $, your portfolio would have been down by almost HALF!

This is not easy to think or accept. People who continued their SIPs would have also done badly – no doubt about that. Your opening portfolio (Jan 2011) would have been down, and so would have the SIP figure.

Obviously at this juncture we can ALL see the negatives and we all KNOW that the market will go down, do we not!!??. (Hey there are some readers who do not get the sarcasm, sorry). Well when on TV and other media you look at the ‘experts’ – their views are worth hearing…

-Markets will go down to 12000 (no clue why there is such a consensus for this number!) and the more optimistic ones are predicting 18000. Of course the very hardy, never say die guys predict 20,000.

Frankly I do not know what will happen.

However a bad year is rarely followed by a worse year (yes it has happened in the past, but I am taking a calculated call!)..which means a NEGATIVE 25% will not be followed by a negative year. So assuming that the index’s starting point is 15,500 for Jan 2012 (I am writing this on 2nd Jan at 9.30am and this is the current sensex), I think seeing the sensex at 19500 is not impossible. This means that the current year’s return would be about 25% – just wiping out the 2011 losses.

Will the Re – US $ be at 60? not sure. However if many NRIs start keeping their money in India (remember the rates of Nri deposits have improved) and the software exports do really well, we could see the exchange rate at 52 instead of 62!

Not guessing the sensex, but just punting on the fact that the IMMEDIATE past has NO BEARING on the IMMEDIATE future. Simple, is it not?

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  1. On the topic of predictions, I was laughing when one expert told last week that nifty will be in the range of 4000 to 5000 for this year. He continued “but if environment changes, then it can move 10% more on either side”.

  2. What a precise prediction sirji!! Didn’t he qualify it with “markets are unpredictable in the short term…”?

  3. Agreed that there is no point in guessing the 2012 ending index levels. But you are right when you say that general trend has been that a negative year is not followed by a negative year. So, chances of a positive return in 2012 are higher.
    But problem with experts/analysts is that they move in herds. And right now, the herd says that markets are bound to go down due to macro factors. And pessimism feeds pessimism. So, who knows where markets are headed…
    Investors should remember that apart from advocates and doctors, experts are generally useless, especially in fields like stock markets 🙂 Average investor should focus on what he can control, i.e. buy stocks of large caps trading at delicious valuations.
    As far as speculation is concerned, Gordon Gekko has rightly said that it is the mother of all evils.

  4. why large caps? that is also a media created bias..it is the slightly lower caps that create value…ignore the top 30…or ignore the index stocks…and u might find more delicious values 🙂

    just kidding, but theories do not work – that is what I wanted to say!!

  5. Subra sir

    Why 12000…? It’s the actual 12PE of sensex which was many a times the market bottom in crashes as i understand 🙂

    Yes why large caps. already there are many well known in mid and small less than 8PE or much more. BUTTTTT should have the guts. To my knowledge small cap is in the 2005-06 levels.

  6. well from the start of my earning after graduation i never did any equity investment. did only trading in it & 2011 was also a great year for me made +69% return.

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