Global financial markets that were cheerfully sailing on fair winds of liquidity, infused by global central banks, have been suddenly hit by a giant wave of selling that has sent prices crashing and left investors gasping for breath.
What we are currently experiencing is volatility, not absolute loss. As is always the case when markets correct, the prophets of doom and gloom have once again sounded the clarion call. A short while ago these very same prophets were flaunting India as the economy of the future - highest GDP growth among large economies, youngest population, huge workforce, rapidly growing consumer numbers, growing purchasing power, fast developing infrastructure, and so on.
Has all this changed in a few months? The answer is a resounding 'NO'. We know that markets do come back from every correction and eventually make new highs. Even the 2008 market collapse - the worst in recent times - was a testimony to this. From highs of 6,200 in January 2008, the Nifty collapsed to a low of 2,600 in March 2009. At that point, many market pundits predicted that it would take many years, possibly a decade to recover from what they called ‘complete and utter devastation of the of the world's financial markets’.
However, the markets were back to 6,100 level by October, 2010, in a span of 18 months! History has shown time and again the continued progress of mankind, and there is no reason that that trend will reverse this time. Staying on course is what makes one a successful investor.
f you’re investing for the next five – 10 years, then your focus should be on the opportunity and the way to harness it. One should keep investing as per her goals and leverage these falls. The current correction in the market provides investors a huge opportunity to increase allocation to equities with a medium- to long-term view.