Some very interesting data point that I culled out yesterday, out if an academic interest.
Truly nice output ☺️
24 years of data on BSE Sensex
Yearly Open
Yearly High
Yearly Low
Yearly Close
_Calendar Year – 1 Jan to 31 Dec_
_*66.66% probability of making positive returns on the Index, by the year end, if we invest on 1 Jan of every year*_
?? This is a revelation in itself…based on historical trend for 24 years ?
_*If we invest at the highest point within a year…50% probability of ending lower on 31 Dec or 45.83% of ending flat (at the highest point)*_
??This is not bad either, when one invests at the worst possible time within a year
Now…..
_*95.83% probability that one ends UP beautifully, if they can get to invest at the bottom of the market & only about 4% probability that they’ll end flat*_
?? This is truly revealing
In this scenario, If you see the gains from the bottom in the year to 31 Dec close….they are not small.
The least gains being 2.11% & 5.17% an the rest of the years, ending with reasonable high double digit growth from the yearly bottom.
_*THE BIGGEST QUESTION IS……WHO CAN CALL THE BOTTOM, AT THAT PARTICULAR TIME*_…….not possible, every year and year after year ?
So, based on this historical trend….can we invest into BSE Sensex on the 1 st of Jan every year? ?…. I have a 67% probability of ending high by 31 st Dec of that year ???
_*This was a pure academic study for me….Equities are for long, at the end of the day*_