Know This Truth About Stock Market Before Investing | Weekend Investing | Alok Jain

Added: 2026-05-26

[00:00:01]Hi folks, very very interesting data to share with you today. Topic of our video is the truth about loss decades in stock markets. Do watch it to the end. If you are a index investor, you must watch it.

[00:00:14]Uh there will be a lot of learnings for you as well with this. Do read the disclaimer before moving ahead. And let's dive in. So what is the context here? The context is that we are sitting with 20 months of no returns on the nifty50 and the despondency is setting in. Uh people are beginning to give up on the markets and saying that you know India has virtually no hope left. All kinds of comments which also come on our channels are pointing towards that u you know suggesting that India has become the next Japan. it'll stay rangebound till 2034 uh and next so many years or decades are not going to be so great for it. So perhaps this is a sign itself that uh things are becoming a bit desperate but let's also uh you know evaluate what happened in other markets for long consolidation. So the most common chart that is referred to is that of Japan where post 1989 it took 35 years for the Japanese Nikai 22 to25 index to really make a newer high.

[00:01:24]So 35 years of consolidation in Japanese market is the uh typical sort of go-to chart in the financial world when somebody has to talk about long-term stagnation of any market. Now the bigger question is that is the decadel sort of long stagnation a rare Japanese market event only? Uh what about other markets?

[00:01:46]Have other markets never had long consolidation periods? How should one prepare and you know act in such long periods of consolidation? So we'll take a look at some of these case studies. So virtually nobody talks about the S&P 500 where post the great depression in 1929.

[00:02:05]The markets actually made a new high only 1954 after that almost 25 years uh of sort of consolidation in that case um post the depression uh period. So 25 years on S&P 500 UK pretty much saw 22 years of consolidation. There were some false breakouts in that chart on the top. But 22 years from 1999 nearly 2000 till 2022.

[00:02:35]Cosby, which is recently doing very well, had a 17-year period where it stagnated. 1989 very much coinciding with the start of the Japanese stagnation. 1989 to 2005. 17 years of going nowhere. The Cosby index.

[00:02:51]Then the Hangen index 2007 made a index high attempted once to break out in 2017 18 still not able to do that 18 years and still waiting for a new high to be made. Germany 2000 till 2013 13 years of consolidation before it broke out of that kind of consolidation. And even India market, India market from Asherneta peak in 1992 and barring the you know the false sort of breakouts that we had here. In actuality it really broke out after 11 years post the meta peak in 2008 peak also it took nearly 6 years for it to break out of that period. So long consolidations are a feature of stock markets. We haven't had one in the recent times and hence there is recency bias that you know markets cannot consolidate for long but they can as we have seen in numerous examples that we have seen. So the long stagnation deep consolidation uh pattern is not unique to just the Japanese market. Almost every other major market has also experienced extended periods of stagnation. And while the index could have remained in a stagnation phase, was the underlying market truly broken or did opportunities still exist beneath the surf surface?

[00:04:16]That is what we want to also explore in this data point. So uh these data points have been very meticulously uh studied by the team and I would appreciate if you could subscribe to the channel and give them more motivation to do such great work. Hen 18 years 2007 to 2024 while the market was stagnant what were the stocks inside doing? So you can see so many stocks whether it was CENO, whether it was Hong Kong exchanges, whether it was power assets, uh whether it was insurance companies, uh Bank of China, uh so many uh stocks were actually having annualized CAGGR of 5 10 15 20% also. 10 cent is right up here in case you missed that. It's nearly 30% of CGR in this period only. So while the market was stagnating, you have fantastic moves happening in several pockets of that market. Let's say let's uh see the US uh the UK market 24 years of stagnation. You can see here the uh footsc index is is right here uh at plus 32% for this 24 year weight. But just look at some of the groups BHP group next group Rio Tinto all of them clocking 10 to 20% or even more uh returns on a uh CGR basis. Even Japan which had a 35 year stagnation had Mitsubishi Cor posting doubledigit CGR returns in that period. you had uh Toyota Motors, Deno, Honda Motors, all these had uh you know more than Nikkei 22 to5 index returns over that period.

[00:06:00]Nikai is right here while all these stocks are much above that over a 35 year period. Even the US markets you had uh uh 2000 to 2013 S&P 500 was flat for 13 years. Apple clocked 25% CG in the same time period. Altria, Nike which is now down of course Caterpillar, Chevron, Ebertlaps, so many stocks doing extremely well while the market was stagnating right there. So despite such long consolidations in the markets, it is very evident that good opportunities will still exist in the markets. So this um chronology of u this table of different indices having uh spent long periods of time in in stagnation and India is also right there uh at 11 years from 92 2003 but lot of opportunities have existed in them. Of course India has been more forgiving than other markets. We have not spent that kind of a time at least in the last many decades um in consolidation. Small consolidation and then we go up. Small consolidation and then we go up and that's what's happening perhaps even now or so. So the real lessons that need to be learned here is that the index investors really need to absorb this uh fact well that blind index investing need not work all the time. you know is a person who would have invested in Henen index 17 years back 18 years back is still waiting for some positive returns uh somebody who's invested in the Chinese market in 2008 is still waiting for uh some kind of returns so index because it's a weighted average it'll hide as many losers as winners sometimes is not able to perform uh whereas stock selection or sector identification if if it is there in your strategies perhaps the compounders of the index will remain in that strategy and the losers of that index will be thrown out of that strategy. So even during loss decades there are ways in which you will be with the strength of that market uh even when uh you know the overall market is not going anywhere. So sector leadership is something that needs to be uh identified and even in stagnant market you will find there are sectors which are leading the market and once you have that discipline of following the leading sectors perhaps even stagnating markets will not stop uh your returns going through. So let us know what are your comments about this kind of a thesis where index investing versus picking stocks or sectors can yield very very different results. Which one will you choose and why? And in case you need help, you can always look at the momentum model portfolios we have where we look at the leading sectors in each market cap segment uh regardless of where the index is going uh in that period. Do let us know your comments. Do watch these other videos from our channel. Do subscribe to this channel if you like this content and certainly do share it with your friends and family.

[00:09:04]I'll see you next time. Bye.