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Rolling 5 year Return at 2.45%: 2011 in Charts

Remember in 2007 how they would tell you that the markets would return great money over five years? Well, you could have gotten better returns in a 3.5% savings account, it turns out.

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(All returns are annualized)

The 1 year return is -25%.

The 3 year return is 16.5% after the huge dip in 2008; if we don’t recover by May, when the index went back up to the 12000 levels on the Sensex, we will see even the three year return go to single-digits.

The 10 year return is a good 16.7%, which is due to the crash in 2001 (lower base). But that dip continued till July 2003, so unless the markets dip substantially from here, I expect the 10 year rolling return to stay above 10% (per year).

But what’s interesting is that in the last five years, the Indian GDP has nearly doubled to 80 lakh crore. The Indian markets, though, have gone nowhere.

  • One of ratios used by experts is Market_Capitalisation/GDP. At present the ratio is trading at less than 1 which indicates that Indian markets may be undervalued. But this is a general Rule of Thumb type of a statistics which does not indicate where the markets may be headed in future.

  • rrp says:

    HDFC Equity Growth MF, VRO, SIP Return calculator
    5 year Annualised SIP Return over period: 6.84%
    10 year Annualised SIP Return over period: 22.53%
    pretty good !

  • Mehul says:

    Deepak,
    This brings to us a classic Q about investment philosophy (specifically for lazy investors parking their surpluses here and there). Financial planners keep advocating (still) for “invest in blue chips and forget them for 10 years” and keep looking down at laymen terming 3 years as long term investment horizon.
    The Q is, if we are in a financial turmoil like what we are today (India and global) and if it looks like a lotsa financial and economical paradigms may be reset (is it too drastic to imagine so?), how will this “invest-and-forget” philosophy pan out? Will it hold good at all? I know, you follow “trend-is-god”, but what do people in value-investing and asset-allocation fields do?
    Looking forward to your views Deepak

    • Honestly, I don’t agree with the “invest and forget” policy. I think markets trend and can go down over long periods of time. If you’re a value investor you should be ready to change your views because in bad times all the bad data doesn’t easily come out, when it does, it’s time to exit. Asset allocators will probably need to hope their allocation to equity that shows losses will be balanced by whatever other asset class they have…