Wise Wealth Advisors

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

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52 week high and low

Posted by Muthu on September 24, 2015

You may be familiar with the term 52 week high and low.

I’ll give you an example. Take State Bank of India (SBI). As on date, the 52 week high is 335.90 and 52 week low is 220.60.

The difference between SBI’s highest price and lowest price in the last one year is 35%.

If you take Sensex, as on date, the 52 week high is 30,024 and 52 week low is 24,833.

The difference between Sensex highest point and lowest point in the last one year is 17%.

In a year, a stock price varies as much even a third of its value. Even the difference between highest and lowest point of index varies as much as 17%.

You take index for any year; this is how the variation would be. Many stocks’ 52 week high and low varies as much as even 50%.

Morgan Housel says, since 1900, U.S. S&P 500 index has provided an annualised return of 6.5%. During the same period, the average difference between any year’s highest close and lowest close is 23%.

If this is how it is, year after year, decade after decade, century after century; why even listen to some explanation on why market went down or up. This is how it works. It’s as simple as this. Listening to media and analysts explaining volatility is sheer waste of time.

Volatility is very normal. If you can understand and get used to volatility, no one can stop you from creating wealth through equities. It’s volatility which scares most of the investors and they make crazy decisions due to the same.

The above pointers shows volatility is the way of the life in equity markets. It is normal to be volatile. It’s abnormal to be otherwise.

But for volatility, everyone would get rich from equity. Life cannot be that easy. Volatility ensures that only few who can be friendly with it, makes huge wealth from markets.

Whenever I get opportunity, I keep reemphasising this point.

If only we can get comfortable with volatility, equity investment is a cake walk.

Be comfortable.

3 Responses to “52 week high and low”

  1. Mohsin Bijepuri said

    Good view point Sir. I value your views.

  2. Siddhartha said

    Muthu, I (along with many other blog followers) completely agree that volatility is ‘by default’ way of creating wealth in the Equity market.
    If the trend of Equity market had been a straight line of growth then there wouldn’t be any risk/pain involved for the investor. And, the famous applies here ‘NO GAIN WITHOUT A PAIN’.
    In real life, during an ECG report a straight line often indicates that live is over. On the contrary, a volatile line indicates life and hope.

    Your articles are always an inspiration. Please continue the good work.

  3. Can you trust long-term Sensex data?

    http://www.business-standard.com/article/opinion/can-you-trust-long-term-sensex-data-113080400773_1.html

    What do you say Muthuji

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