{"id":16305,"date":"2019-10-03T12:23:52","date_gmt":"2019-10-03T06:53:52","guid":{"rendered":"https:\/\/www.fundsindia.com\/blog\/?p=16305"},"modified":"2019-12-03T16:26:33","modified_gmt":"2019-12-03T10:56:33","slug":"how-to-make-the-most-of-stock-market-declines","status":"publish","type":"post","link":"https:\/\/fundsindia.com\/blog\/mf-research\/how-to-make-the-most-of-stock-market-declines\/16305","title":{"rendered":"How to make the most of stock market declines"},"content":{"rendered":"

At some point in time, every year, the market has fallen below its peak. The average intra-year decline has been -22 percent for the last 29 years. Till 2011, intra-year corrections of more than 20 percent were very common, as seen by the red bars ( chart below). Post-2011, the intra-year declines have mostly been in the range of 10-15 percent. This also coincides with a period of low volatility across global equity markets led by stimulus from major central banks.<\/p>\n

So a 10-30 percent intra-year correction is almost a given and has occurred in 20 out 29 years (i.e 2 out of 3 years.)<\/p>\n

The chart below shows the maximum fall in Nifty from the highest value it reached during the year, to the lowest. The bars marked in red represent falls exceeding 20 percent.<\/p>\n\"Stock<\/a>\n

Now if you had seen this chart alone, would you still invest in Nifty?<\/p>\n

Let\u2019s add one more interesting data point and check if your view changes.<\/p>\n\"Stock<\/a>\n

Despite\u00a0substantial intra-year drops, the calendar year returns have been positive in 21 years out of the 29 examined. In other words, only 8 declines have led to a negative year.<\/p>\n

If we isolate the positive calendar years, the average intra-year decline is still around 18 percent.<\/p>\n

Sample this:<\/h4>\n