Category: Markets

What is Long Term in Stock Market? Hint: It’s NOT 5 or 10 years!

What is Long Term in Stock Market?

You hear that often from your friends and TV and web that stock market is for the long term. Right? But how long is long term? 1 year, 5 years, or 10 years?

If you think 5 years is long term then here’s the spoiler. If you make 30% CAGR for 4 years and then suffered a 50% loss in the 5th year then your 5-year CAGR is just 7.4%. That is, less than FD returns.

And if you think 10 years is long term then here’s another spoiler. 10 year CAGR of SBI, Bharti Airtel, ONGC, Tata Steel, NTPC, BHEL, Reliance, Wipro, are either ZERO or less than FD returns. Remember, all of them are or were once blue chip stocks.

That’s not all! Today’s star performers are Hindustan Unilever and Infosys. But if you invested in those stocks at its peak in 2000 then your 10-year CAGR would be ZERO or less than FD returns. Likewise, if you invested in Reliance (today’s another top performer) in its 2008 peak then your 10-year CAGR is actually ZERO or less than 4%.

Remember these are the stocks that are recommended at all times by experts. Out of the above stocks, Hindustan Unilever is really interesting. Hindustan Unilever’s 10-year CAGR from its 2000 peak is actually ZERO. But its 17-year CAGR is around 8% and its 18-year CAGR is around 10% and again its 18-year CAGR + Year To Date return is around 12% which is clearly impressive.

So this video is for retail investors who are entering the stock market hoping for huge returns. Thanks to ‘Mutual Funds Sahi Hai’ ads which is clearly encouraging an equity culture in India. And Mutual Fund sellers are advertising their plans as if it’s safe as FDs in the long term.

It’s true that SIP is risk-free but not for 5 or 10 years but when your investment horizon is 15 years or more. Because for one-time investments, the stock marketing timing (or the entry price) does matter. A lot.

Experts always say: BUY. They will recommend a SELL only when the stock is going down and not when it’s going up. So your entry/exit time matters a lot.

Video / Malayalam

I hope you have learned a thing or two from my new video. If so, do share my video with your friends and family on your social media channels!

Happy Investing/Trading! 🙂

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Forget 100% Stock Market Returns. Even 30% Is Huge!

Forget 100% Stock Market Returns. Even 30% Is Huge!

Normally, when it comes to investing people want 100% returns. That is, everyone wants to double their investment — no matter what.

Perhaps that explains the reason why people jump into penny stocks. Because they think that it will be easier for a Rs. 4 stock to double to Rs. 8 and then to Rs. 16 and so on. And it’s not just in stocks. People enter real estate as well with the idea of doubling their investment.

But do you know that only a handful of stocks offered 30% returns over the past 15-20 years? I randomly checked the CAGR of some multibaggers on my watchlist and I realized that only a very few of them offered 30% CAGR in the past 18 years.

Some of them are Eicher Motors, Titan Company, Page Industries, Lupin, Sun Pharma, etc. All those multibagger stocks like MRF, Maruti, HDFC Bank, Infosys, TCS, Britannia, Hero Motocorp, ITC, L&T, Reliance Industries, etc. offered less than 20-25% over the past 18 years.

So I would say 100% CAGR for 15-20 years is not just practical but it’s IMPOSSIBLE. You know why? Because a $10,000 investment growing at 100% p.a. for over 30 years could list you on Forbes Billionaires List.

$10,000 investment compounding at 46% CAGR for 40 years gives you $40 bn:

$10,000 investment compounding at 50% CAGR for 40 years gives you $120 bn:

One biggest mistake that I did when I started investing in stock market is that I never tracked my CAGR. Of course I have my own reasons too for that. Like, I was not salaried and and my investments and withdrawals were random, etc. So if you are a stock market investor then you should have an investment goal.

Video / Malayalam

I hope you have learned a thing or two from my new video. If so, do share my video with your friends and family on your social media channels!

Happy Investing/Trading! 🙂

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17 Stock Market Lessons From 17 Stocks Over 17 Years

17 Stock Market Lessons From 17 Stocks Over 17 Years

Today I’m sharing 17 stock market lessons that I have learned from 17 stocks over 17 years (oh yeah, this is my first ever YouTube video). I have explained each lesson mentioning the name of the stock that I purchased at that point of time. And yeah, it includes all kinds of stocks: blue chips, large caps, mid caps, small caps, micro-caps, and penny stocks.

  • Today, I’m gonna talk about 17 lessons that I have learned from my stock market experience.
  • 17 lessons are from 17 stocks over a period of 17 years.
  • So I will be explaining mentioning the stocks.
  • In that period, I made profit and loss in almost all kinds of stocks.
  • Blue chips, large caps, mid caps, small caps, microcaps, penny stocks. Everything.
  • I haven’t included every single stock that I have purchased.
  • Instead, included only a handful of stocks that taught me a thing or two.

(more…)

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Markets, Exchanges, Indexes, And Investments

"Markets are not exchanges, exchanges are not indexes, and indexes are not investments. Yet, these words are often interchanged in discussions about index investing. A financial market is created when there is an exchange of financial instruments. These transactions typically take place on an exchange. Securities exchanges are facilities for trading securities among investors as well as whereby public companies, governments and other entities issue and redeem financial instruments. Securities traded on exchanges include, but are not limited to, stocks, bonds, unit trusts, derivatives and pooled investment products such as limited partnerships."

— Forbes

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