One amazingly stupid question that I get asked regularly is “when will the market go up?”.

Well my answer is “You know NOTHING about the market”. Sometimes I can say that, most times I cannot. So if I am a fund manager (aka asset gatherer) I have to say “lage will go up soon”. Simply because that is what people want to hear. However, look at the sequence of returns that we have got from 2013 till March of 2019. It reads as follows: 8,19, 25, -9, 17, 11, 17. Even if you were to go further 5 years BEHIND, the returns have been 20,-38, 81, 11, -10.

These are amazing sequence of returns. If you want numbers better than this, there is something WRONG WITH YOU. I have said this many times. If you miss out investing in 2019, you would not have missed out anything. It is not a market which you are going to look back nostagically in say 2022 and say “I wish I had”…Like you would have said in say 2010 or even in 2015. However it has been a great market for equity SIP and you should have got decent returns if you had a half decent fund manager with some discipline. We have got used to a very nice, placid market. We have started thinking of equity market as a PPF on steroids. It is not. We need to see some violence. We need to see a -20% soon. I have no clue what will give, but one should surely be less optimistic than what fund gatherers aka CIO say in their presentations. Do your sip, yes, but stop pretending that there is a big bump up coming. On the contrary, expect a big fall (followed by a big rise?).

So what will you hear:

  • equities is the best asset class any way
  • TINA – there is no alternative
  • parts of the market are undervalued anyway
  • look at price to book, FII money coming, SIP success….
  • Remember most CIO talk like Ifa or sales head
  • CIO have now been fully trained to talk like sales heads.
  • Namo in the second term will be more reform oriented
  • Namo has (or is?) a magic wand
  • RERA will work like magic
  • Banking is being cleaned up like never before

The problem is all of this is true. It is also true that Midcaps have given up about 17% and small cap have given up 30% from its peak.

However, to me, none of this means that the market is in a mood to run like Bolt. Well I am sure it is a long marathon ahead. Maybe a Comrades run of 89km..but you cannot run 89 km at the pace at which Bolt runs his 100m right? So get ready for a walk, a trot, a small jog, catching your breath…just make sure that you are headed in the right direction.

If you are an IFA remember you have to just keep the client in the habit of doing his SIP. No point in stopping the sip. Ditto if you are an investor. Keep your sip going. Write down the annual returns from 1979 till now. Realize that you are in one of the golden periods. It does not matter whether you are in good debt funds or good equity funds. Do not bother too much about large cap, mid cap or small cap. These are like traffic lanes – the lane you just left ALWAYS seems to go faster. If you are in multi-caps, you are doing well, your fund manager will navigate between the large to mid to small caps. When CEO, CIO, Sales heads, and your IFA tell you that there is a big Namo boom coming, you should realize how INEXPENSIVE were the Bose ear plugs you bought.


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