In the long run, growth in stock markets would be on par with earnings growth of underlying companies.
Markets would deliver only what corporate India can deliver. Our earnings growth currently is not worth mentioning. It is expected to pick up in a year or two.
In the short run, markets can be ahead of or behind earnings. So it is difficult for anyone to predict whether markets would be up or not, in next 2 years. It can be either way.
Once earnings start going up at decent rate, we can expect the market to mirror it. Again markets are capable of both mirroring it in advance or with a time lag.
It is not possible for us to predict the timing of these. It is not required either. We are disciplined investors who invest regularly across business and market cycles. Occasional investments also will find unimaginable wealth created after elongated tenures.
The present government is taking many right steps which should start reflecting on the ground in one to two years.
Though I do not know how the markets would be for next 2 years, I would suggest you to keep the expectations low.
If markets perform well despite our lack of expectation, it is well and good. If it takes time to start performing, let us utilize the opportunity to acquire more units every month at lower price.
The long term future of this country is good. There are many peaks which we would be scaling in the years and decades to come.
At the same time, we’ll continue to go through business and market cycles. No asset class can escape cycles. People who thought real estate and gold are exception to the cycles, now realise it is not so.
Remember in a long term growth story like India, declines are temporary and uptrend is permanent. The units we acquire in each decline multiply our wealth in next peak. As I said above, we would be scaling many new peaks in the coming years and decades.
All you need to do is to continue to stay the course. So please continue to stay the course with no near term expectations.
As I always repeat, avoid the bad habit of looking at the portfolio regularly. This is true for any market and more true for bad markets like these.
Completely avoid financial media. It would do you more harm than good.