Why full market cycles hold the key to financial serenity

“Ek Disha Ki Raili Dekhkar, Nirnay Nivesh Ka Mat Lena

Kam Se Kam Ek Cycle Tak, Intzaar Hamesh Kar Lena.”

Translation- Never take an investment call by observing a unidirectional rally

Wait at least till one cycle before making an investment sally.

Gita Gold: Navigating Investments with ancient wisdom

In the bustling world of investments, the siren call of a one-directional trend can be alluring and mis-leading. Picture this: the market's heartbeat racing, tempting you to join the sprint. Yet, let's take a pause and delve into the sagacious advice echoed by seasoned investors and ancient wisdom alike—waiting for the full market cycle is the key to unlocking financial prosperity.

The Allure of One-Directional Trends

Imagine a rollercoaster climbing to exhilarating heights, and the temptation to jump on during the ascent is palpable. The excitement and fear of missing out (FOMO) are real. But here's the catch: reacting impulsively to a market's upward sprint might not align with the well-thought-out financial strategy you deserve.

Why Wait for a Full Cycle?

Consider waiting for a full market cycle as your backstage pass to unveil the market's true nature. Markets, like life, have their own ups and downs. It's the full cycle that paints the complete picture, offering a nuanced understanding of market dynamics. This isn't about fleeting gains; it's about adopting a patient, disciplined approach and cultivating a long-term perspective.

Lessons from the Ages: The Bhagavad Gita's Wisdom

Enter the Bhagavad Gita, an ancient scripture that shares pearls of wisdom resonating with the very principle of waiting for a complete market cycle. In Chapter 2, Verse 14, Lord Krishna advises Arjuna to navigate pleasure and pain with equanimity, much like the changing seasons. Just as winter yields to summer, market conditions evolve, urging us to await the full cycle for a holistic perspective.

Navigating Storms: Real Stories, Real Gains

Let's rewind to the 2008 financial crisis. The market took a nosedive, testing the nerves of many. Those who clung to the rollercoaster and rode out the downturn witnessed a triumphant recovery. By 2010, the Sensex not only bounced back but soared beyond pre-crisis levels, proving that patience is the unsung hero of financial triumphs.

Fast forward to the Covid-19 pandemic in 2020. The market faced unprecedented uncertainty, akin to a turbulent ride. Yet, investors who strapped in, trusted the cyclical nature of markets, and embraced a long-term vision found themselves not just rebounding but reaching new heights with the Sensex crossing 50,000 points in 2021.

Global Adventures: From Wall Street to Tokyo Streets

Venturing beyond our shores, the S&P 500 in the U.S., Japan's Nikkei 225, China's Shanghai Composite, and Europe's financial indices - each tells a story of resilience. Whether it's overcoming economic challenges or bouncing back after downturns, these markets emphasize the enduring nature of financial journeys.

Market Rallies and Crashes: Navigating the Rollercoaster

In the symphony of market cycles, rallies and crashes are both inevitable realities of equity investing. Imagine a mutual fund scheme that not only withstands the storm but outperforms in both up and down markets. Such a scheme is likely to yield superior risk-adjusted returns and outshine other funds in the long term, providing investors with a robust tool for financial growth and stability.

Warren Buffett's Insight: The Ultimate Guide through Uncertainty

As we draw the curtain on this financial journey, let's echo the timeless wisdom of Warren Buffett, the Oracle of Omaha: "Risk comes from not knowing what you're doing." In the intricate choreography of investments, knowledge emerges as the ultimate shield against uncertainty. Armed with the lessons of history, the profound teachings of ancient scriptures, and the enduring resilience of global markets, venture into the financial arena with confidence.

This isn't just about numbers on a screen; it's a journey where each step is guided by understanding. Buffett's words serve as a compass, reminding us that informed decisions are our best defence in the face of risk. So, as you navigate the currents of the financial world, maintain composure. Temporary setbacks are part of the rhythm, but they don't define the entire melody. Embrace the full market cycle, for within it lies the revelation of the true nature of market trends. Let knowledge be your guiding star, paving the way for a financially empowered and resilient journey.

Closing words: In verses profound, Krishna's wisdom flows, In Chapter 2, where true insight grows. "Equanimity, like changing seasons' embrace, winter to summer, a rhythmic grace. As markets shift, conditions evolve, await the full cycle, problems will resolve.”

(The writer is Senior Vice President, SBI Funds Management Ltd)

(Translation & synopsis by Vatsal Ramaiya, Deputy Vice President SBI Funds Management Limited)