This as usual is just a catchy headline which means nothing. I have no clue where the market will be today, tomorrow or 10 years later. I just think I will get about 2-3% over and above the rate that i can get in my PPF (or equivalent) accounts.

I put this headline much before the manistream media because I think the following sequence of events will happen:

the market has already gone up to say 19,500 on the sensex. Most people will still not realise that this means the market has gone up about 25% in the past year and about 40% (annualised basis) in the past 6 months. Be that as it may, now the market will touch 20,400.

Once it is within spitting distance of 21000 the media will start writing about how the market will reach 21000 and stay there ‘BECAUSE this time it is different’.

Well, well the market may actually touch 22000 and stay there. People who stopped their SIPs (over intelligent, over qualified?), will be in denial.

They will say ‘deficits are high, GDP is not growing, FMCG is over priced, ….’ so markets HAVE to come down.

Sad that market does not listen to well qualified and well dressed people. So it will go up to say 25000.

NOW the Main Media will carry stories of how Mr. Gupta of Kanpur put Rs. 20000 and it became 25000. And how Mr. Pandian of Sriperumbudur put Rs. 5000 in the market and made it 8000 in 8 months time.

Now the retail investor who had gone away will come back and say ‘Did I miss the bus’ – It should be fear, but it will be GREED driving him.

He will then want to put in a LUMPSUM – sip is too boring you see…The problem is there are 100,000 people waiting to put 25,000 and about 100,000 waiting to put Rs. 100,000. Apart from the tons of people wanting to put direct money, you will Mutual fund and ULIP sales go through the roof (so many people will take fresh policies too).

So suddenly US D 10 billion of Indian retail investors will take the index from 25000 to 36000.

Actually much more will come in at 35ooo than at 15000 or 18000.

Then the market will start coming down. Soon people will ask (circa say 2016?)..subra ‘market is at 24000 when will it go back to 35000? and i will say…

Well it takes 10 years to beat previous highs…so please ask me in 2027.

By then I may be dead…so frankly I can give you a clear number.

Let us say March 2027. Chances are I may be dead, you may be dead or www. subramoney.com may be dead or DAMMIT I may be right…:-)

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  1. Nice article to get the perpective but we as human being in general are in greed to get max returns.

    Nice way to say “I will get about 2-3% over and above the rate that i can get in my PPF (or equivalent) accounts”.

    Market is smarter than us and let us follow the above statement in financial planning.

  2. People look at index levels, then start and stop their SIPs, which is wrong in my opinion. They should rather look at overall valuations of the markets, helped by the PE and Dividend yield ratios, and pause investing when those values are considerably higher above their historical averages( 10,15-year averages).The senesex can be cheap at 21000 but be costly at 8000 if earnings dont support. Investors should go for valuation based SIPs in my opinion ( and yes, this involves a slight bit of market timing as well, but better than investing at overheated levels say PEs> 20 or 21?)

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