Reasons are many, you just need to see and accept them, for example,
Positive Number One: Markets are not going to go to Zero
S&P500 had seen 12 Bear Markets since WWII and 5 Bear Markets since 1970 excluding March 2020 and the S&P 500 has always been higher just 10 years later and by an average of nearly 240%. And in Indian Context,
History suggests whenever markets have faced turbulent times, they has eventually been able to overcome that and gone on to make newer highs. We have seen NIFTY50 (Sensex) deliver a one-year average return of 50% in six similar instances earlier. There is no reason to believe that it would be any different this time.
Positive Number Two: Shortest bear market in history, at least for the Dow Jones Industrial Average…
The longest-running bull market ended and the bear market began for the Dow average on February 12 when this benchmark last hit an all-time high. By March 23, the Dow had tumbled as much as 37% to the lowest level since late 2016, before surging more than 20% in a span of just three days. Gains of at least that amount are sufficient to be considered the end of a bear market.
Normally, it might take the U.S. stock market several months to rise or fall by the magnitude of this nature what we saw happening during March 2020
Positive Number Three: Even, Professional traders are fearful, as evidenced by spikes in a gauge of volatility known as the VIX as we are in an unknown that we cannot quantify yet.
Who else left to get panic now ???
Positive Number Four: Historically, bull markets last much longer than bear markets and their returns are much higher than the bear market declines.
While bear markets can cause worry and fear while they’re happening, they’re typically much shorter than bull markets. Investors who were willing to ride out stock market downturns in the past ended up receiving returns that more than made up for their losses once the market recovered.
Positive Number Five: Bear Markets are Transitory which gives…
New Market Leaders, New IPOs, New Trading Instruments, New Set of Investors, New Set of Rules & Regulations which makes up coming Bull Market much stronger, longest, deepest and sustainable then the earlier ones.
Therefore, new High and unimaginable peaks for NIFTY 50 (Sensex)… for example,
1st) – 2000 Bear Market Ended at 850 in 2001 and by May 2006 Made High at 3774
2nd) – 2006 Bear Market Ended at 2596 and by January 2008 Made High at 6357
3rd) – 2008 Bear Market Ended at 2252 and recovered all losses by November 2010
4th) – December 2011 Bottom at 4531 saw Peak of 9119 by March 2015, and finally,
5th) – February 2016 Bottom at 6825 shown us New Peak of 12430 by January 2020
Positive Number Six: Market already tested People’s emotions to the limit…
“For those investors who are kicking themselves asking, ‘Why didn’t I get out in this time period?’”
There was really nothing out there that said this could happen so quickly. In what’s proven to be an especially raucous four weeks for investors, all of the major U.S. benchmarks have tumbled into bear markets, defined as declines of at least 20% from recent highs.
And when the desire to sell to go to cash so that you physically feel better exceeds the rational view that unless you need the money immediately, you’re better off waiting through these cycles and looking for opportunities.
Comparing the current market with prior crashes is very tricky, That’s because while there are comparable periods in history that saw similar uncertainty with respect to economic growth or volatility in the stock market, there aren’t when it comes to the daily life and well-being of fellow Citizens.
“The public health aspect of this has no good precedent, really.”
AND, the key positive is the proactiveness with which the government and RBI have been handling the situation to prevent the negative fallout of the situation.
The stock market is running a sale thanks to coronavirus.
There are so many different industries and stocks that are trading at 30%, 40%, or half off what they were a couple months ago. Investors who felt like those were good securities a few months ago, now have bargain prices.
If you do want to make changes to your portfolio, consider selling shares of those companies that are less attractive and investing more in those that are more attractive now.
Three basic rules of investing:
1). Diversify your portfolio to include a mix of different assets,
2). Rupee-cost average to spread out your purchase price over time, and
3). Rebalance to ensure your portfolio aligns with your risk tolerance.
Final Thoughts: “Be safe with your health; be bold with your investment decisions.”
But still, be caution that the coronavirus sell-off may not be done.
As the market gets higher and the bounce continues, the corporate news is going to get worse, and it’s going to be harder to ignore. But again,
History has shown time and again the continued progress of mankind, and there is no reason that that trend will reverse this time. Staying on course is what makes one a successful investor.
Finally, remember that no matter what happens in a single Day, Week, Month, Year the stock market has trended upward over a period of years and decades.
Thanks for Reading.
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