Hi,
Let me start with a question today…
Which category of investor do you belong to?
- I will not invest now because the Nifty has fallen to the 10,700 levels.
- This is the best time to invest because the Nifty has fallen to the 10,700 levels.
Why do I ask this question? Let me tell you why I ask this in a bit.
With what we are experiencing in the overall economy these days, is something extremely similar to what the economy had experienced in 2001-2002.
What are those similarities?
- Auto sales are down
- Consumer sentiments are extremely weak/poor
- The growth rate is down
- Banks are facing the NPA roadblock
And also take a look at the table below:
| Year | Nifty EPS | Growth YOY | Year | Nifty EPS | Growth YOY |
| 1999 | 61 | -19% | 2016 | 394 | -5% |
| 2000 | 66 | 7% | 2017 | 417 | 6% |
| 2001 | 69 | 5% | 2018 | 445 | 7% |
| 2002 | 74 | 7% | 2019 | 487.0 | 9% |
| 2003 | 91 | 23% | 2020e | 580-617 | 19-27% |
| 2004 | 136 | 50% | 2021e | 680-729 | 17-18% |
| 2005 | 165 | 22% | |||
| 2006 | 187 | 13% | |||
| 2007 | 273 | 46% | |||
How similar was it then to now? Extremely similar right?
- 1999 was a year with a negative EPS growth – 2016 was a year with a negative EPS growth
- 2000-2002 were slow years. Similar to the slowdown we are witnessing from 2017-2019.
And then what happened between 2003 and 2007 was every investor’s dream run.
Unfortunately, not many investors benefitted from this bull-run.
Coming back to the question I asked at the start, the investors who fell in category 1 probably repented.
But for investors who fell in category 2, they would have created a fortune for themselves and their family during that phase.
Coming now, the past 3-4 years have witnessed negative to slow growth in EPS because of the much-required cleaning process initiated by the government. And this seems to be the time when the economy should be reaping the rewards, and these rewards look a lot more certain and sustainable going forward.
In view of this, we do not want you to miss out on starting your wealth creation journey during such times.
Read more: How Long-term investing helps create life-changing wealth – TOI.
