October 10, 2016

Lost 90% in a stock? Your Portfolio Might Still Beat The Nifty

A blind purchase of all stocks in the Nifty 10 years ago still beat the returns of the Nifty. But obviously we can’t say this happens all the time; we’d have to test different time frames (10 years, 5 years etc) and different start and end points). This is not the point we want to make.

The point is: Most of your money was made in the big winners – so much that they overrode the losers, to even beat index returns in the meantime. So when some stocks go to zero, don’t fret!
  • Three stocks lost over 80% in absolute terms.
  • Three more stocks lost more than 40%.
  • A Further five other stocks saw their stock prices contract (sub-zero-percent returns) in the last 10 years.
  • That’s 11 stocks out of 50 that gave you returns lower than zero!
  • And yet, you beat the index.

2 comments:

  1. The comparesion is not balanced. All the dead stocks are considered for evaluation stocks but Nifty index is not taking care of these stocks.It is compared with recent stocks on nifty Index.This index should be evaluated with dead stocks n compare.

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    Replies
    1. That exactly is the purpose of the study... read in detail.

      Investment was made in NIFTY stocks at a particular point... strategy is invest and forget. Inspite of 3 dead stocks, the portfolio still generated good returns.

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