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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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69% Positive

Posted by Muthu on December 25, 2014

Wishing you a Merry Christmas.

As per this piece, since 1825, the US stock market has produced an annual gain 71% of the time, or 134 times, while losing ground just 55 times. A standard distribution chart, which happens to take the shape of a Christmas tree, shows how for most years, the market moves within a range of zero to up 10%.

When I mentioned the above in a tweet yesterday, I got a query from @StableInvestor about Indian stock markets.

As you are aware, we’ve maintaining a detailed database on various asset classes since 1979-80 (year in which Sensex base was set as 100).

From 1979-80 to 2013-14; for the last 35 financial years; we had a 24 years of positive Sensex returns and 11 years of negative returns. So since 1979, the Indian stock market has produced an annual gain 69% of the time, or 24 times, while losing ground just 11 times.

After taking into account both the above positive and negative years, the annualised return of Sensex during the above period was 16.72%. If we assume a dividend yield of 2%, then the long term returns works out to 18.72%.

Since we’ve more positive years than negative years, it is better for us to stay the course and be in the market all the time. Positive years more than compensate for the negative years. It’s difficult to guess which would be a positive or negative year but can be confident that we would have more positives years than negatives.

So be positive. Not 69% but 100% positive!

One Response to “69% Positive”

  1. Sunil K Yadav said

    Dear Muthu sir, I am a regular reader of your mails. your mails are very good and effective to under stand the market. these are very helpful to me and my friends. So keep posting.

    thanks and wish you marry chrismas and prosperos happy new year.

    Sunil Kumar Yadav

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