Year 2023 is the BEST time to INVEST. Market may resume uptrend around mid 2023 followed by massive bull run in 2024 & 2025.

Image Source: Source: MFI, FundsIndia Research.

Risk Return Trade Off - If you are taking higher risk (i.e., investing when markets are down like 2018-19 or 2022-23 or when investors are tired & fearful) is associated with greater probability of higher return in future. At the same time taking lower risk (i.e., investing during good market condition like 2017 or 2021 when everyone was making easy money) is associated with a greater probability of smaller return in future.

Crux of the matter is : We should invest more money in stocks when things are gloomy around (dull phase) and less when things are booming (bull phase).

• If you observe, whenever there is -ve -OR- lower single digit returns in a year or two (2000-03, 2008, 2011, 2015-16), the subsequent year delivered huge returns > 25-30%.

• Year 2022 delivered 6% index returns, if year 2023 remained flat 0-6% or -ve returns; then 2024 & 2025 will be most likely to have massive bull market similar to what we saw in 2017 or 2021 (~25-30% returns in each year).

All we need to know is just one pattern i.e., after every night, day will come for sure, similarly after every dull phase (contraction), bull phase (expansion) will emerge. Patterns repeat, because human nature hasn’t changed for thousand of years. Shifting of stocks from weak hand to strong hands is a MUST before any meaningful rally to take place. We must understand the psychology behind the patterns.

-Sanjay