Tuesday, 26 November 2013

SENSEX fails to deliver: Six Sideways Years

The last few years have been rather disappointing for most avid stock market investors, when compared to the boom period that we experienced earlier.  The India shining story seems to have been put on hold, as we struggle with rising inflation and slowing growth.  Political inaction, which was always a concern, has morphed into political paralysis, with the government seemingly unable to take any action at all, let alone the right economic actions.

In this scenario, it is instructive to take a look at the last 6 years from a stock market perspective, and see how the benchmark SENSEX index has performed, and what strategies we could or should have used to build on our investments.  I did not necessarily follow some of these principles myself, which has led to my sub-par portfolio results.  However, this exercise is useful to figure out what actions I should take in the future to keep my portfolio moving at the right pace in the right direction to hit my financial goals.

Let’s begin with a graph of the SENSEX over the last 6 years starting from Jan 2008 to Nov 2013 (we are almost at the end of 2013 at the time of writing this article)  The first thing that grabs the eye is the fact that the SENSEX has primarily moved sideways over these last six years!  There has been one tremendous plunge in the stock index; in late 2008 - early 2009; with an equally impressive recovery after that by end of 2010, followed by 3 years of ups and downs.  But when all is said and done, over the last 6 years the SENSEX is still at the same level at the end of 2013 as it was at the beginning of 2008.

So what are the implications of this sideways movement?  Are there investment strategies that have worked for you to maintain your portfolio growth over this time?  As a long term investor, I do have some funds invested directly in index funds that track the SENSEX.  Any funds that I had invested before 2008 have remained at the same level after these six years. If I had just left the money in a bank savings account, I would have got a better return than what I got from the SENSEX index fund!  Clearly in this case, the “long term”, atleast over the last six years, has not worked out for me.  How about you?  How did your portfolio fare over the last six years?  What strategies did you use to overcome the sideways SENSEX?  Over the next couple of articles I will explore a few strategies that I did use, and some that I should have used, to compare and contrast their performance using the last six years index as a reference.


  1. Hello, I agree with you completely. The mantra of staying invested in the market does not seem to work now. I have experienced pretty much the same despite SIP's in top rated mutual funds. I advocate around 50% of the retirement corpus in debt, 10% in equity, 35% in property and 5% in gold for a secure retirement.

  2. Hi I have personally invested 55% in Blue chip Shares, 25% in Equity Mutual Funds, 10% in Tax Free Bonds and 10% in Gold ETF's. Once REITS (Real Estate Investment Trust) are issued I will invest 10% in that and thus my new portfolio would be 50% in Shares, 20% in Equity Mutual Funds, 10% in Tax Free Bonds,10% in Gold ETF's and 10% in REITS. Thus the dividends from the Blue chip Shares, annual interest from the Tax Free bonds and monthly payout from the REITS would take care of my monthly household needs and the appreciate from Shares and MF would take care of inflation........Let me know your thoughts

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