- Sensex was created at 100 on 1979.
- In 2017, Sensex hit 32000.
- That's simply 320 times growth.
- Sensex has grown by 16.87% on an average over the past 37 years.
As per the Rule of 72, 72 divided by 16.87 would give around 4.26 years - the approximate time taken to double your money, and 4.45 years to be exact.
Hence 100 became 200 in 4.45 years. 200 became 400 in another 4.45 years and so on.
As a result, 100-200-400-800-1600-3200-6400-12800-25600 : doubling in 8 terms of 4.45 years. That's 35.6 years. But now 37 years have gone by (1979-2017). If we add the balance for 1.40 years, the sensex value comes to 33536 - close to its current levels of 32000.
Hence Investors needs not worry about bubble in the market. The growth rate has been in line with its historic levels since 1979.
If we continue at the same growth rate, by 2019, you need not be surprised if the sensex reaches 51000!
And by 2023... OMG. Let me stop it there.
Hopefully we will be witness to this magic of compounding.
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