While the headline might look a bit cryptic, there is a powerful insight that I wish to bring to your notice (if you have not noticed it already).
In my post “Another Insight to remember”, I had written about the Sensex drawdown.
A drawdown is a peak to trough decline during a specific period of an investment, fund or stock market. This means the difference between the highest level of the Sensex (in our case) in a particular year and lowest level for that year. A drawdown typically gives the volatility of the stock market or an investment.
The average annual Sensex drawdown from 1979 is 28.52%.
If you are prepared to ride this drawdown every year, and a decline of 30-60% every 5-7+ years, then you are qualified to be an equity investor.
However, if you aren’t prepared to ride out this drawdown, you don’t have what it takes to be an equity investor. In short, you do not have the qualification to be an equity investor.
The question then is – do you have this qualification?
If not, it’s time to get qualified.