CoVID-19, Delta wave, Omicron wave, US increasing interest rates, Oil prices shoot up, higher inflation, FII selling, and finally, Ukraine war. The news channels are busy, so do the markets. Our world always bustles with both good news and bad news. And, markets keep dancing to the tune of this good-bad news combo and investor anticipations.

Investors call it ‘volatility’, and this phenomenon turns them confused about whether to build up positions or simply exit from the equity market. Markets keep experiencing volatility in every shape and size, every now and then.

How would novice yet ignorant investors play this perplexing puzzle? They abstain from participating in the market or exit their positions without realizing that these volatility episodes are perpetual in nature.

We have seen a lot of smart investors but haven’t come across an ultra-smart investor who possesses the superpower to perfectly time the market. Those sorts of Superman investors probably never exist as they would have lost all their money, wrongly anticipating market movements. 

Anyway, there exists another breed of investors contrary to the Superman investors. They are called the Intelligent Investors who believe in the ‘Indian Growth Story’. They are not super-intelligent but understand a few basic facts about India and its markets. A few of the facts are quoted below:

• Initiatives by the Indian Government like Bankruptcy Law, GST, Make in India, Digitalisation, among the few, are turning India into one of the top-performing economies in the world.

• Corporate earnings are recovering in a rapid pace, improving the fundamentals and valuations of the Indian equity market.

• The rising Indian GDP can transform the Indian economy from a $3 trillion to $5 trillion economy in the next 3 to 4 years. As a result, A long-term bullish market sentiment is on the horizon.

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Combining this market knowledge with a few historical market facts will solve the investors’ confusion. Check them out below.

1) We have to stay invested in the market. If we miss the best 20 days of the market, the portfolio value falls by ~74%. The following chart confirms this fact:

2) The chart below displays the historical fact that the downturns in the market because of war and terrorism are actually short-lived yet offer an attractive buying opportunity.

3) The long-term movement of SENSEX (see the chart below) shows that it has gone through several corrections but has eventually recovered.

The sword of Damocles infallibly dangles over markets but being an Intelligent Investor or an Ignorant Investor is always a matter of choice.

A confused yet ignorant investor fearful about making the wrong decision ends up making either a bad decision or no decision at all. This may push them backward without attaining an inflation-beating return from their investment.

Therefore, in the game of investing, always take your stand – whether you are an Ignorant Investor or an Intelligent Investor – wisely.

Best Regards

Akhil Bhardwaj

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Alpha Research