When stock market returns lie!
by Dr Uma Shashikant, PhD in finance.
She is a well-known Knowledge Management Consultant in the capital market.
As the Sensex inches upward, everything looks hunky-dory. In fact, many have convinced themselves that just a year in the stock market is sufficient to earn great returns.
Even those who think long-term find themselves in a nice position. Just look at the historical returns: Five year returns for the year ended December 31, 2005 are 18.73% while the three year returns are 40.34%.
Most diversified equity mutual funds have given returns higher than the Sensex and their historical returns, despite the disclaimers, look large enough to get investors interested.
It is obvious investors have begun to believe that good returns from the equity market should be in the 40% plus region, and that number is not too tough to achieve.
That is indeed the impact of few good years!
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