Get to know Mr. Market.
You will trust in Mr. Market only when you know Mr. Market. Mr. Market has some basic characteristics. He always moves as per these characteristics. When you know these characteristics you will know what to expect from Mr. Market. Mr. Market does not move in a straight line every year. Mr. Market moves in a cycle . Like a cycle of seasons ( summer, winter, monsoon). Mr. Market has three phases in one full cycle: Low return years Negative return years High return years
It takes 7 years to complete one full Market cycle.
The first test of our faith and patience is to allow our investment to complete one full Market cycle.
The reward for this patience is very worthwhile and satisfying.
One year gives a bumper return like 40% to cover up for the past years of low return.
The minimum return expected in one full Market cycle is 12% and the maximum goes up to 20%.
The return is an AVERAGE of the last 7 years' returns. It is not an ANNUAL return.
Every investor should complete ONE Full Market Cycle to trust Mr. Market.
Keep the same patience like you keep for a 15-year LIC policy or 15-year PPF .
Mr. Market can not be compared with a Bank FD which is meant for short term parking of money within 3 years.
Year Annual return
2012 31%
2013 3%
2014 37%
2015 -1%
2016 4%
2017 36%
2018 -3%
2019 6%
Avg return in last 7 years : 14%
Stay invested to complete one Full Market Cycle to reap rewards.