Monday, 13 September 2021

SENSEX NIFTY WILL NEVER CRASH LIKE JAPAN'S NIKKEI. Here's why


 

Those investors who avoided stock markets even in these bullish times have a new reason not to invest in Stock Markets

Their biggest question to me is "What if BSE Sensex /Nifty is in Bubble like Japan's Nikkei was in 1989”?

Fairly valid and understandable.

 

Let’s first understand the background

 

The Nikkei Index hit an all-time of 38,915 in Dec 1989 and today after 32 years it is 30,381

No...it has NOT given any bonus nor seen a split!!!

Those who say invest for a period of 20 years and you will never lose money.... show them this!

 

The highs touched in 1989 was touched even after 3 full decades !!


So, has Japan NOT grown in the last 32 years?

Of course, it has!

Then why?

What if the Indian BSE Sensex and Nifty too see a similar fate?

 

 

In an extremely high BULL market like the current one, the above question will NOT COME UP EVEN IN A DREAM because we indeed are in a DREAM BULL RUN and it’s not looking like stopping soon.

 But DOUBT is an inbuilt habit in Humans and more so in Investors and hence to SEARCH for reasons to avoid investing in Equities, many FD lovers tend to come up with such questions. 

Before answering the question of whether the Indian Sensex and Nifty could see the same fate as Nikkei or not, let’s find why Japan's Nikkei NEVER RECOVERED to its old glory

 For your even the great recession that hit the US in 1929 and shook its Equity markets  recovered in about 25 years but 32 years and still Japan's Nikkei touching its previous glory looks a distant dream

 

Let's try to understand .................


POPULATION :

Japan's population is aging, workforce shrinking, and hence they are forced to SAVE rather than spend.

We all know that for an economy to grow and grow fast, SPENDING is what is required and to the BIG question,

Srikanth’s answer :

India's population is a YOUNG population

Latest data shows that more than 1/4th (26.16%) population in India are aged LESS than 14 years which means huge working-class and obviously HUGE SPENDING

India is expected to have 70 crores of young consumers (more than the combined population of Brazil, Germany, Russia, and Germany) by 2030. 




The young population means young investors who are also more likely to be ready to increase exposure to risky assets and stock markets will be a huge beneficiary of this.

Hence India's GDP is bound to go up and go up SUPER SPEED

 


 

HUGE PE :

The period prior to 1989 (when Nikkei hit ALL-TIME HIGH) Japan saw unparalleled prosperity and boom for nearly a decade.

This led to huge money in hands of people and huge spending thus creating a cycle of boom and overheating of stock markets and real estate

In fact, the Nikkei PE was above 60!

Just imagine! PE of above 60 for a developed country is like a PE of above 100 for India

It’s like BSE Sensex quoting at 1,95,000 and

NSE Nifty quoting at 70,000 at present valuations!

Nikkei was that expensive!

Srikanth’s answer:

India is yet to see this kind of prosperity and boom. India is all set to see these kind of glory years which means we are yet to see a REAL BOOM In Indian Stock Markets

Hence it would be prudent to say that BSE Sensex and NSE Nifty will be seeing lots of glorious days going ahead

Indeed, we are all lucky to be in this kind of GLORIOUS TIMES and we SHOULD make maximum use of this to create unparalleled wealth by staying in Equities and growth assets (and definitely not Gold or bonds, except as a part of Asset Allocation)

 

 

STRONG YEN:

The Yen became so strong that it dropped from 240 (in 1985) to 140 and further to below 100 against the Dollar making exports highly competitive rendering factories to halt production resulting in job losses

It’s like Indian Rupee going from the present 73 levels to sub 32 levels!!

Even today the Japanese Yen is around 109 levels. Still a long way to go

Srikanth’s answer:

 Indian Rupee has been weak to steady and rarely strong and moving like the Yen is certainly out of question.

Moreover, the RBI and the Govt of India have been proactive in this matter making sure that our Exports stay competitive and in turn have been doing a phenomenal
job in keeping the Indian Rupee Steady 

 

 

INFLATION :

Inflation in Japan from 1990 has been ranging from 1% to negative 1% going up to 2.76% only once.

Low inflation is bad for businesses and the economy (just like high inflation)

Moderate inflation is the BEST scenario

Srikanth’s answer:

India’s young population is a big blessing for us and due to this the SPENDING is only bound to increase keeping the inflation at good rates

RBI in India has been doing an awesome job when it comes to controlling inflation and also ensuring a conducive atmosphere for GROWTH.

 

 

SHARP RISE IN BANK RATES :

The Bank of Japan sharply raised Inter-Bank lending rates in late 1989. This was done to deflate speculation and keep inflation in check.

The rates went up from 2.5% to 6% in just 1 year ! 

An huge huge jump of more than 140% which obviously led to heavy repurcussions. 

This caught many bulls off guard who rushed to cover their positions, and this created a cycle to SELL as more and more people got trapped.

Srikanth’s answer:

Yet again, we have to truly appreciate our Central Bank, the RBI for its amazing work in making sure that the rates are range bound and are rarely volatile. The pumping of money and the soft interest rate all show how good RBI has been in keeping rates in control.

 

 

ECONOMY :

Japan's economy is not only aging but also shrinking.

In fact, Japan's economy shrank at the FASTEST rate in 2019 as it was hit by sales tax rise, a typhoon, weak demand and of course due to shrinking workforce.

Japanese consumer market is getting smaller day by day.

Srikanth’s answer:

India's GDP is expected to touch $8 trillion !!
and India's per capita income is expected to touch $2000 (thats Rs.1,50,000) putting more money in the hands of people by 2030 which is nearly 3 times of today. 
3 times growth expected in the next 9 years in GDP



As I said earlier, India’s young population is our biggest strength. The Young workforce will ensure that the economy is moving at a fast clip. The proactive moves by the Central Government also is keeping the economy in growth mode. Lot of moves like the GST, Start-Up India has ensured that Indian economy is on a good road

 

 

==============

SO...

I do understand Mr.Srikanth

But just in case if the Sensex/Nifty does give NEXT TO NOTHING returns for the next 10-15 years, what's the solution to our Wealth Creation?

Srikanth’s answer:

 

SIP, the Magic Mantra :

Use the MAGIC MANTRA....the Rupee Cost Averaging .... the humble SYSTEMATIC INVESTMENT PLAN (SIP)

All said and done, the humble sip is the David who can take on the mighty Goliath.

As I have pointed in my book DONT RETIRE RICH...there have been many mutual funds (Ex: ICICI Technology Fund) whose NAV from Rs.10 nosedived to Rs.2 and SIP investors were already sitting in profit at NAV Rs.8.

They did not even need the Nav to touch Rs.10!

That's the power of Monthly SIP

 


ASSET ALLOCATION:

While Asset allocation may look foolish in these Bullish times, the fact remains that Asset Allocation is one of the most effective to book profits at high rates and reenters at lower levels.

Time and again this has been proved multiple times.

For example, a 50-50 allocation automatically ensures you sell at high rates and purchase at low rates

Asset Allocation may not give you super returns but has the potential to give you above-average returns with below-average volatility

Think over it

 

 

REINVEST THE DIVIDENDS:

If you are investing in stocks directly, it would be prudent to reinvest the Dividends that you receive.

Not only will the wealth compound faster but also you will be buying at different time intervals.





The FTSE 100 return for the 18-year period between 1999 and 2017 was a measly 20.4%

But with dividend reinvestment, the return shot up by nearly 6 times to a decent respectable 119.3%

Yes... up from 20.4% to 119.3%

That's the power of Reinvestment.

 

 

DIVERSIFY YOUR GEOGRAPHY TOO :

Yes. India is in bullish mode

Yes. India is on the threshold of Super-Fast Growth

But it would be hugely prudent to diversify your investment across the Geography to avoid over-dependence on 1 country and also to benefit from other Growth Economies.

Investing in Global Funds like say PGIM Global Opportunities Fund, DSP US Opportunities Fund, Invesco Global Consumer fund etc gives you exposure to economies across the World spreading your risk.

 

 

STAY THE COURSE:

Yes... there will be sharp corrections in between. It’s inevitable. Whether it's stock markets, real estate, and even Bond rates, corrections are inevitable and unavoidable.

Never get worried about people's reactions (or the Market falls) when you have invested in good STRONG fundamental stocks/funds.

Likewise, you need to understand your MFD's choice of investments may go through pain for a brief period.

But history has proved innumerable times that

 

CORRECTION IS TEMPORARY

AND

GROWTH IS PERMANENT!!

 

The LONG TERM does not matter if you don’t survive the short term.

So... never convert your Temporary Paper Loss into Permanent Loss by selling off Blue Chips.

 

 

BTW,

All the indices be it the Nikkei 225, BSE Sensex, the NSE Nifty does not include dividend returns which are quite decent.

In spite of this addition, the Nikkei is still not back to its old high levels.

 

 

 

MATRUBAI'S MUSINGS:

The French Economist Thomas Piketty pointed those profits generated by companies are always MORE than that particular country's economy

This makes it very clear that if you feel that Indian The economy will do well, the Indian companies will do better, and, in that case, the Stock Markets too will do better

The biggest growth driver for India is the rapid shift from Unorganised to ORganised. 

This will boost the Listed companies profits and resultantly their stock prices


And for your portfolio to do MORE THAN BETTER, the best an option would be to give your corpus to a competent Fund Manager who is bound to be much more knowledgeable with more resources and research at his beckoning to generate much higher returns than a layman investor

And most importantly, remember, EQUITY IS THE BEST ASSET CLASS for your Wealth creation






See the above graph. 

Its a graph for 120 years and clearly Clearly Equities have been the runaway winners 

And this is not just in 1 county but across the World 

 

 

And when it comes to investment and wealth creation, you should be

a) Consistent

b) Unemotional

c) Logical

d) Have no Biases

e) Have an expert to guide you

A Guide will instill discipline into your investment strategy and identify right assets for your financial goals.

 

Become a Drudpati and never let the Right Side of the Menu affect your decision on the left side of the Menu !!

Equity is unavoidable 

and 
Mutual Funds are the BEST way to ride the Equity Asset Class

All the best,

We wish that you do not just become a mere crorepati but upgrade to become a Drudpati.

Because CROREPATI KA ZAMANA GAYA !!
Regards,

Srikanth Matrubai

 




All the best,
Regards,
Srikanth Matrubai
MUTUAL FUND DISTRIBUTOR
REBALANCE VOLATILITY CERTIFIED COACH
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH




Also read the below articles 

You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

 
Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

Do read the book and give your valuable feedback and request you to post positive comments on Amazon. https://amzn.to/3cHUM6M/ 

You can purchase the book on Amazon and Flipkart 

For the best of ideas on where to invest to create Mountains of Wealth 
join my TELEGRAM channel
WEALTH ARCHITECT
    https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/

Friday, 10 September 2021

LORD GANESH GIVES TIPS ON HOW YOU CAN BE FINANCIALLY INDEPENDENT!!



Lord Ganeshji is brilliant when it comes to Financial Planning. 
Big Head says AIM BIG
Small eyes say FOCUS
Large ears say LISTEN MORE
Trunk removes BAD investment and 
BIG stomach to digest volatility

To get reward in form of MODAK and sweet Financial Gain follow Lord Ganesha and his other tips..

Read more...


Lord Ganesh is revered as the Lord of Beginnings and Remover of Obstacles.
Lord Ganesha is one who is loved by young & old alike.
He is worshipped by Shivais, Vaishnavas, and even Shakti Aradhakas.
Lord Ganesha is seen as Shrewd, Intelligent, Wise and Full of Knowledge.
His grace is absolutely essential for our Successful LIfe, be it Financial or Otherwise.
Here's how I connect Lord Ganesha with a Successful Financial Plan





THE BIG HEAD 

Lord Ganesha's BIG Head indicates us to Aim BIG and achieve BIG.
Our Financial Plan should be such that we achieve something BIG in life.
Obviously, this means that our focus should be on LONG TERM GOALS


SMALL EYES :
Our Financial Plan should take into all the small Nitty Gritty Minute Details which could create obstacles in achieving our Long Term Goals.
The Small eyes show that we need to CONCENTRATE on minute things which look small but not actually be so.
Remember: A Small Leak can sink a HUGE SHIP!


LARGE EARS :
A saying goes "A Good Listener is a Good Leader".
Likewise, keep your Ears Wide open to absorb knowledge from all corners and listen to Experts whenever & wherever possible especially when it is from a person like SRIKANTH MATRUBAI!!!

SMALL MOUTH : 
The Small Mouth of Lord Ganesh is an indication to us to Talk Less, Talk Sense and Work More.  Also, don't be loud-mouthed with your Finances, discuss your investment plans only with trusted persons like SRIKANTH MATRUBAI!!


SHARP SINGLE TUSK : 
The Single Pointed Tusk of Lord Ganesh indicates us to discard Duality from our minds. Have a Clear Cut Definite Goal and Focus on 1 Goal at a time and then move on to another. Don't jump from one target to another in between without reason.


LARGE TRUNK : 
Your Financial Plan should have the flexibility and adaptability to recognise and weed out the Rotting Apples and retain performers. Very important in ever-changing circumstances. Remember a Trunk has the Capacity to uproot a Tree and at the same time, even pick a Needle!
Your Plan should be that Flexible!!

LARGE STOMACH : 
The Large Stomach shows us that our Plan should have the wherewithal to withstand and digest the Volatility. It should have an ideal mix of Debt, Balanced, and Equity Funds.
Develop to Digest all the volatility. Have patience.  The BIG Stomach shows Acceptance.

While some funds/Stocks could look hugely attractive with all indications of being the next multi-bagger, stay calm,  let the news flow filter out and the dust settles, and take required action once the Air is cleared.


MOUSE : 
Lord Ganesha's vehicle is the small MOUSE.
Mouse cuts Ropes that Bind. Cut desires that make you spend more and prevent from Investing.
Keep Desire of Devil under Control.
Ride it rather than making it scare you.
Control the desires (mouse) or the Desires  will destroy your wealth
Even though the Modak is next to it, the Mouse dare not eat the same without the permission of Lord Ganesh.
Likewise, no profit booking without your Advisors' consent.





ANOTHER POINT REGARDING MOUSE : 
The mouse has the ability to see even in the Dark.
Know how to see the light even in dark times. Follow the path shown by your Advisor and stick and you will reach the LIGHT.
Control the Mouse (Desires) and you will see LIGHT!!

MOUSE also indicates that even the Mightest depends on the smallest.
So, a small SIP could easily make you the CROREPATI.
Why Crorepati....even a DRUDPATI  !!! 



ONE FOOT ABOVE ANOTHER FOOT : 
Ganeshaji is usually seen sitting with 1 leg folded and the other on the Ground.
Meaning aim for the Sky but be rooted to the ground.
Aim for a  BILLION even a ZILLION but know your capacity and aim for achievable Goals!!
Having a Goal too high could lead to disappointment.
Accept your limitations and work towards realistically achievable goals.


FINALLY, THE MODAK : 
the Delicious Modak/Kadabu is awaiting you at the end for your patience, sharp focus as a Reward.
Modak is a digestive aid and full of Proteins. And this Prasad is given at the End of the Pooja and you too will get your DESERVING REWARD when you stick to your Financial Plan and follow the advice of your FINANCIAL ADVISOR.


Post Script : 

Many images of Lord Ganesha has a Snake wrapped on HIS Stomach. 

This indicated PROTECTION OF CAPITAL (Profit).

It also indicates controlling of things that cause us unrest.
For a Successful Financial Plan, it is necessary to do a constant review, monitoring, and needs to book profit/protect Capital in case of extraordinary events.


Best of luck,
May Lord Ganesha bless you with Health, Wealth and Happiness.
Srikanth Shankar Matrubai

Ganapati Bappa Mourya

#Srikavi #DontRetireRich

I had earlier similar posts (twice) on my other blog www.goodfundsadvisor.in 





All the best,
Regards,
Srikanth Matrubai
MUTUAL FUND DISTRIBUTOR
REBALANCE VOLATILITY CERTIFIED COACH
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH


You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

 
Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

Do read the book and give your valuable feedback and request you to post positive comments on Amazon. https://amzn.to/3cHUM6M/ 

You can purchase the book on Amazon and Flipkart 

For the best of ideas on where to invest to create Mountains of Wealth 
join my TELEGRAM channel
WEALTH ARCHITECT
    https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/

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