23rd March 2020, was a red letter day for Indian equity investors. A year ago, Nifty reached a real low point, closing around ~7.6k levels.
On this date, UTI Nifty Index fund had a 1Y return of -47.7% (NAV of 74.4731 on 25th March 2019, NAV of 50.4013 on 23rd March 2020).
This image should put things in perspective.
What back then no one could've known, was what's coming next. A historic bull-run, that'd go on to drive valuations up to astronomic levels.
It's not the fall that makes it special, it's what follows.
Some observations:
A crash like that can be a teachable moment for lot of investors:
On this date, UTI Nifty Index fund had a 1Y return of -47.7% (NAV of 74.4731 on 25th March 2019, NAV of 50.4013 on 23rd March 2020).
This image should put things in perspective.
What back then no one could've known, was what's coming next. A historic bull-run, that'd go on to drive valuations up to astronomic levels.
It's not the fall that makes it special, it's what follows.
Some observations:
- SIPs that have been running for 7 years till March 2020, were in losses and not breaking even. This would prompt a generation of advisors to update their definitions of long term to be higher than 7 years.
- We've had people hopeful for Nifty reaching 6k-6.5k, so they could wait a bit before "deploying capital".
- There were those who started promoting dynamic asset allocation funds or other exotic "hedge" products.
- Those who've deployed significant capital around March-April 2020, would now go on to preach how their "PE-based" (or some other made-up strategy) ideas have done great, and every investor should follow these. You won't hear from these fair-weather talking heads when the next crash comes around.
- NFOs and IPOs have shown how everyone wants to cash in on a raging bull run.
A crash like that can be a teachable moment for lot of investors:
- If you had liquid corpus for emergencies parked in an asset back then, that made you worried; that asset cannot be where you park your emergency corpus.
There were 2 weeks of Liquid / UST funds posting negative returns, every day. One day in March, even PPFAS Liquid Fund had negative 1-D movement.
If that worried you, it's time to rethink your emergency corpus and where you're keeping it. - People look at historic crashes and salivate how they could have made the most of it, if they were around at the time.
In reality, historic crashes don't just crash the markets. It puts your life / career / family / well-being on the line.
When a historic crash actually rolls around, last thing on your mind would be your equity portfolio.