_*BSE Sensex, Yearly Open, High, Low & Close and An Academic perspective*_

Some very interesting data point that I culled out yesterday, out if an academic interest.

Truly nice output ☺️

24 years of data on BSE Sensex 

Yearly Open 

Yearly High

Yearly Low

Yearly Close 

_Calendar Year - 1 Jan to 31 Dec_

_*66.66% probability of making positive returns on the Index, by the year end, if we invest on 1 Jan of every year*_

👆🏼 This is a revelation in itself...based on historical trend for 24 years 😀

_*If we invest at the highest point within a year...50% probability of ending lower on 31 Dec or 45.83% of ending flat (at the highest point)*_

👆🏼This is not bad either, when one invests at the worst possible time within a year 

Now.....

_*95.83% probability that one ends UP beautifully, if they can get to invest at the bottom of the market & only about 4% probability that they'll end flat*_

👆🏼 This is truly revealing

In this scenario, If you see the gains from the bottom in the year to 31 Dec close....they are not small.

The least gains being 2.11% & 5.17% an the rest of the years, ending with reasonable high double digit growth from the yearly bottom.

_*THE BIGGEST QUESTION IS......WHO CAN CALL THE BOTTOM, AT THAT PARTICULAR TIME*_.......not possible, every year and year after year 🙂

So, based on this historical trend....can we invest into BSE Sensex on the 1 st of Jan every year? 😀.... I have a 67% probability of ending high by 31 st Dec of that year 😂😂😂

_*This was a pure academic study for me....Equities are for long, at the end of the day*_

_*The whacky moves of BSE Sensex, Down, Up & Where to?*_

BSE Sensex ....

20 Jan 2020 - 42,273.90

📉

24 Mar 2020 - 25,638.90

_*That's a 39.35% fall from the peak to bottom in about 45 trading days*_

And then...this happened

📈

29 April 2020 - 32,720.20

In about 22 trading days, _*An upward movement of the same Index by about 27.61%*_

_*How on earth can we catch these moves?*_

Not to worry..... _there are enough people in the world to claim credit on predicting both these directions to the dot_ 🤐

Now, what's in store for the future?

_*I still don't know & have no idea of a market movement in the short run*_

Was this a _bear trap_ & the market is going to crash out full, again?

Was this value buying?

Are we in for a future shock, like in the great depression?

_Time will answer these questions_ 😌

_*Crisis, Predictions & Flying Tangents*_

The above  illustration 👆🏼, that I've made is pretty self explanatory 

Over the history of human life, every time there was a crisis situation, the world was supposed to be doomed within the next couple of years.

These predictions came from *experts* in various fields.

A predictor's circle of competence (if any) is closed within a spectrum of data & vision. But the most important of all, _*INTUITION*_ is primarily missing.

In reality.....  _*All these predictions made during such pandemic, terror economic, financial or any other kind of crisis; turn out to be absolute duds Vs the reality in the world, when the accountability time comes*_

_*These predictions are flying tangents of the predictor's circle of competence*_ (as it represents in the illustration)

And last but not the least....

Whether a prediction comes true or not...the favourite line of the predictor is - _*See, I (We've) Called This Long Ago*_  😂😂😂.....making it their own, either way 🤦🏼‍♂

Should we still believe them???

_*Shapes, Economic Recovery & Logos*_

As usual, the Economists, Analysts, Financial wizards of the street are making predictions on ... *What shape will be the Economic Recovery?*

V shaped ?

U shaped ?

W shaped ?

L shaped ?

🙄🤔.... Well, _I don't know_

Btw.... _there are 22 more alphabets to have the economic recovery shapes named after 😀 & many many other Logo Shapes to name after_ 

I will start naming Economic Recoveries which are based on the below company's logos  (On a Lighter Note).... Pls be advised to refer to the respective logos 🙂

_Nike swoosh shaped recovery (slow upward tapering)_

_Adidas shaped recovery (sharp but higher up, every quarter)_

_Apple Bite recovery (some part of the economy is fully bitten off forever)_

_Cisco shaped recovery (up & down...cycle repeats a couple of times)_

_MGM (metro Goldwyn mayer) recovery (the lion roar super recovery)_

_Microsoft Quadrant recovery (4 different ways in which the economy might be recovering, all at a time)_

_The Google recovery (we're still searching for recovery to happen)_

_Target (retail stores) recovery (specific and targetted recovery)_

_Amul recovery (utterly butterly delicious recovery)_

_Doordarshan recovery (closed & protected economic recovery)_

_Air India recovery (the Maharaja recovery....without any trouble)_

_SBI recovery (lock & key - economy can open with the right key only)_

I can go on and on ☺

We'll come to know of the Economic Recovery shape, after the recovery is fully done.

Until then, let's keep guessing 😌

_*Thoughts, Portfolio & Cash Inflows*_

_One's Thoughts leads to one's Actions_

_One's Portfolio Positioning (Asset Allocation) leads to one's Future Money Life_

_But, One's Current Cash Inflows is what matters for one's Current Survival_

_*Judge, Judge & Judge*_

_Judge a company's management on what they speak when their stock price keeps going up & again on what they speak when it keeps going down_

I read this somewhere, earlier 👆🏼

I tried to replace some of the words in the above statement 👇🏼

_Judge a Mutual Fund Scheme's Fund Manager on what he speaks when the fund is performing well Vs when it's  facing trouble_

_Judge a Mutual Fund company's management on what they speak when all their schemes are on a great track Vs when a majority of their schemes are having a horrible run down & when certain unwanted decisions are to be made_

_Judge an Advisor (any kind) on what he or she speaks & actions out; during one's good, bad & tough times_

_*Front end, Back end & Linear Returns*_

*Me:* When do returns acrrue to investors in equity markets?

*Fund Manager :* Front ended or Bank ended (and he ends his answer there)

I understand it this way......

_*Front ended returns*_ - _An investor's returns are piled up during the first 3  or 4 years of investing & then, it's always an average up or down. RETURNS STABILISE OFF, there after.

👆🏼 _*Works best with a Single One Time Lumpsum Investment*_

_*Back ended returns*_ - _An investor keeps on investing for a long long time & then, the miracle of all the Returns fall into the lap during the last 3 or 4 years of the holding period. RETURNS STABILISE OFF, there after.

👆🏼 _*Works best in a Systematic Investment Plan*_

Now...... _Most Investors expect something called, a _*LINEAR RETURN*_

_*Linear Returns*_ -  Delivering a progressing return from one stage to next or from one year to the next year in a stable and consistent way. 

👆🏼 _*THIS IS NON EXISTENT IN INVESTING*_

Investment Returns in equity are always this way 📉📈📈📈📉📈📉📉📈📉📉📉📈📈📉📈📈📉📈📉📈📉📈📈📉📉📈📉📈📈📉📈📈📈

_*TIME IN THE MARKET IS THE HEALER*_

_*Common Money, Uncommon Sense, Which way to go?*_

👆🏼 an Illustration to describe on the _*common money Vs uncommon sense*_

The choice is pretty simple but very difficult to execute 😌

  _Which way do we go?_

The _*Common Money Way*_?

Or

The _*Uncommon Sense Way*_?

_*Mr or Mrs. Market beats us black & blue in the short run...always & ever*_

Let me provide you with a data point and _*pls pls let me know the Super Human who had predicted this movement*_

And my infinite bows to the *human* who did sell off & invested on these days, respectively ☺ (both days)

All this action thriller in the year 2020.....& In under 3 months or 62  trading sessions 🤷🏼‍♂

Index chosen ----- Nifty 50 (based on the main equity Index, closing values)

_*16 Jan to 23 Mar - Returns @ -38.37%*_

_*23 Mar to 17 Apr (today) - Returns @ +21.77%*_

Btw.... _if the index needs to climb back to its 16 Jan peak, it needs to move up by about 62.5% from the bottom on 23 Mar_ 😀

Anyone willing to stick their neck out and make a prediction for the next 3 months 🙂

I can't, for sure 😌

_*My Predictions for the future*_

_*No TIMELINES pls*_ 😂😂

_USD $ will go bust_

_Euro will go bust_

_Dependence on Oil will dramatically come down_

_We'll have a new Global Currency (don't ask me, which one? I Don't know)_

_Equities will still continue to be the best Asset Class to Invest_

_All crypto currencies will go bust (unless backed by Central Banks)_

_Gold will probably have its longest ever bull market & then collapse off into oblivion_

_Technology, as we see it today will completely vanish (sooner than later)_

_Full time employment will be history (sooner than later)_

_Education will not be via Schools, Colleges & Universities (physical buildings)_

_There will be more pandemics & we will still continue to be unprepared (everytime, a pandemic will appear in a different form)_

_We'll try to go back to seeking self-sufficiency @ micro geographic levels_

_Most people  will continue to be Financially Illiterate_

_Politics will continue to get dirtier (don't know what is left, though)_

And, I can continue to go on and on...

Blah

Blah

Blah

_*I CAN BE WRONG ON ALL THE ABOVE PREDICTIONS*_

_*Pain, Suffering & Behaviour Change*_

More Illustrations flowing through my mind 👆🏼🙂

_*Pain, Suffering & Behaviour Change*_

_For an impactful long term behaviour change, there has to come in a very large pain & suffering_

That's the simple concept.

_This is proven again & again with 'N' # of people; especially while managing their investments or life relationships_

The larger the damage with an experience, the larger is the change in behavior _*away from it*_

_*Consistency, Sustenance & Reality*_

👆🏼 illustration on....

_*Consistency, Sustenance & Reality*_

We work & convert _Time into Money_ for increasing or achieving Consistency in our Earnings / Income

We work & convert _Time into Money_ for increasing or achieving sustenance in Lifestyle

But, both these lines are _never ever linear_, in Reality.

_*There are always Ups & Downs in Earnings & Lifestyle*_

If Earnings & Lifestyle peak-off somewhere (which, they will) & we can sustain that with consistency....the _monetary aspect_ in our life is taken care of.

If our _Income / Earnings_ keep going up.... _*there is no issue*_

But, if our _Lifestyle_ keeps going up perpetually..... _*none can save*_

*INCOME can keep going up perpetually, if possible*

*LIFESTYLE has to stop going up somewhere, else it's a disaster just waiting to happen*

_*Stress Adjusted Income*_

One more Illustration 👆🏼

Quite Self Explanatory & I've discussed this concept with many of you during the course of our discussions.

_*Stress Adjusted Income*_

_We need to live by it_

A Matrix that I came up with...to check for oneself

_WHICH QUADRANT DO I FALL IN?_

_WHAT AM I GOING TO DO ABOUT IT?_

If I'm already in a *BLISSFUL STATE*, _HOW DO I STAY IN THAT QUADRANT?_

_*Choose the right Quadrant & try to stay put there*_ 🙂

Trust me..... _THIS IA NOT AN EASY THING TO ACHIEVE_

_*Rally in a Bear Market, Buy or Not*_

_From the recent bottom on 23 March 2020 (EOD close) till this moment.....Indian Equity Index - BSE Sensex rallied up 17.08%_

*Yes.... 17.08%*

Now, I don't know if this rally will continue to go up, go down or just stay volatile 🤷🏼‍♂

But, I'll try to keep buying within the bottom bucket range 🙂 (yesterday's illustration)

Is this the bottom bucket range? 🤔

_I Don't Know, today_

But

_I'll definitely know in the future_

NEVER EXHAUST LIQUIDITY

_for living_

Or

_for Investing_

_*If I Can, Hold & or Buy*_

One more new Illustration 👆🏼🙂

All one needs to do is...

_Continue to HOLD during the down phase_

& Or

_Keep the INVESTING accelerator on & not to brake_

The future is for sure, taken care of.

Do I need to get the *timing of my buy* right.....

*Not Essential*

As long as I can get the *bucket phase of buying*, right.... it's fine

What if there is NO Liquidity to Buy? (The worst scenario for anyone)

_Just continue to HOLD the portfolio_

_*Peak, Low & Holding Period*_

👆🏼 one more data point culled for all your consumption

This tells the importance of *staying invested & staying the course*

The best and the worse case scenarios presented from the peak of 2007 to the low and peak of 2020

Bottomline.....

_*HOLDING TENOR IS THE MOST IMPORTANT VARIABLE IF ONE'S INVESTEMENTS ARE REASONABLY DIVERSIFIED*_

_The longer one holds, the farther it is away from disaster_

_*Asset Classes, Purpose & Liquidity*_

One more illustration I came up with ...

_If we can't understand this Pie, none can help us_

_*GDP, Sensex & Co - relation*_

One more illustration from my previous data points 👆🏼

Pls check the illustration in a landscape mode...

Calendar year data...

_There is NO established co-relation between the Equity Indices performance (short run) and the GDP figures_

The Green lines represent when GDP and BSE Sensex ended up in the _*same direction*_ (up or down)

The Red lines represent when GDP and BSE Sensex ended up in the _*opposite directions*_(up & down)

I've taken an equal # of such instances just to cull out any anomaly.

The degree of variation between GDP growth and Sensex performance also can be seen

There is just *NO TREND* that can be derived

The lines in both the graphs *DO NOT* move in a similar trend 🤷🏼‍♂

_*Earning, Saving & Investing and Spending*_

One more illustration, i tried today 😀....

A large degree of one's personal financial life depends on these 3 critical variables

_If managed well, it's a financial bliss_

_If not, not only financial but even life is at stake_

Today's _EARNING_ leads to 2 options of ...... _Spend_ and or,  _Save & Invest_

But, tomorrow's _SPEND_ comes only from today's savings & investments. 

_Earnings are going to stop one day; atleast the active earnings (for majority)_

But, _Spending_ is never ever going to end.

Bottomline

_Maximize today's Earnings_

_Optimize tomorrow's Savings & Investments_

_Minimize today's & tomorrow's Spending_