We are back to where we were: MYTH BUSTER

NSE Index Nifty was @ 7963 on 1st Jan 2016. From there it crashed all the way to 6971 on 25th Feb 2016. That's just before budget. A combination of domestic worries and global lullness spoilt the markets. After seeing a positive budget and fueled by global recovery stock markets recovered all the way to 7912 on 21st April 2016. That's why this article is titled "We are back to where we were".

A market which stated from 7963 on 1st Jan 2016 to 7912 on 21st April 2016 - looks really boaring. There seems to be absolutely no gain in the market. But the real opportunity was inbetween these 2 dates:

• Those who invested only on 1st Jan 2016 - are more or less at break even, even today.
• But those who made additional investment on 25th Feb 2016 would have made a better return. 
• And those who invested only on 25th Feb 2016, would have made a killing returns. (See table below)
• Many of us assume that the index (NSE Nifty or BSE Sensex) reflects the returns generated by the investments. But the reality is bit different. As you would see from the table below, there were many stocks which had delivered far better returns when compared to the index.
• Mutual funds ofcourse tail the index returns in the short period. But over longer period they generate significant outperformance.

So the secret to investing is not investing at one point and waiting for the investments to appreciate. But to invest at every opportunity (market fall) so that the returns are optimized.

Now, here is a Do-it-yourself homework.

• Assume that you invested Rs.10000 on 1st Jan 2016 on all the stocks mentioned above and compute its current market value.
• In the 2nd case, Assume that you made investment of Rs.10000 on both these dates : 1st Jan and 25th Feb on all the stocks mentioned above. Now compute its current market value.
• The 3rd case. assume that you invested Rs.10000 on all these stocks only on 25th Feb 2016 and calculate its current market value.

You will be surprised by the results : The returns generated by carefully picked stocks (like the one mentioned above) would be far far be better than the returns generated by NIFTY and SENSEX. And only when you 'feel' these results, you can appreciate these results.