Ridham Desai, Morgan Stanley : Timing vs Time

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Ridham Desai —�—Morgan Stanley :

Timing vs Time

We are 8 Years into this  Bull Market
It’s been the slowest ever in pace of returns .

Corrections are insignificant in the longer run

It’s been a very hesitant one .

Sensex can triple in next 5 Years . So just stay put . Don’t try to time this .

How much Sensex falls : Drawdown effect

94% of days you were down . That’s why equities generate premium . Every 5% correction tests your character. And if you pass that test — Superior returns awaits you .

Liquidity is all hearsay . As for every buyer there is a seller .

Liquidity is the force of the bid . If Markets are gaining there is more force in the bid . If Markets are falling force is in the offer .

Valuations :

      Markets are Trading  at 18 times forward earnings . Markets are a forward looking animal . PE is not a good metric to judge .
Price to book multiple is a good method to value .

India’s range is 2—�-5.5 .
We are at 3 right now — In the middle .

Valuations have usefulness at extremes . We are not there right now .

Valuations are relative .
10 year bond is at 6.5% .
Bonds are available at 16 year earnings whereas equities are available at 18 Years .
Now bonds will expire in 10 years whereas equities will continue their earnings .

Timing vs Time

Since 1995 5556 days Markets traded .

Index gained 900% but best 100 days have 600% of that Returns and if you somehow avoided those days because of trying to time the market then your returns would have fallen to just 300% from 900% .