INVESTING AT MARKET PEAKS

Don’t get deterred by peaks, equity investing is a long term game

The Indian stock market represented by the S&P BSE Sensex had a fairly good last quarter of 2019, crossing the 40,000 points by the year end and closing above 41,000 points in January. While the rising streak creates a pretty hunky dory picture of the market for investors, it might also have made them worried whether the index has peaked and will it start to decline now. With memories still fresh of the sharp decline they saw in 2008 after the Global Financial Crisis started, it is only natural that they have such a concern now. But there is one fact they tend to overlook – that the index value has doubled from 2008 peak of around 20,000 points for the Sensex. The lesson here is that markets usually reward investors who exhibit patience. This article is an attempt to break the myth that investors should not enter the market when it is at a peak.

Investors thus should not get dissuaded by market peaks, instead when investing in equity, have a long term investment horizon and invest systematically in a disciplined manner so that you may to derive better returns from the asset class. As a British-born American investor, economist and investor says “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund.
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