On April 11, Ashish Kacholia shared a thought-provoking reminder from fellow investor Vijay Kedia that underscores a profound reality in the world of finance: real wealth is forged in the fires of bear markets. As Indian stock markets bounce back after a recent downturn, Kacholia’s post serves as a timely reminder for investors navigating these turbulent times.
The Power of Investing in Bear Markets
In his post on X (formerly Twitter), Kacholia echoed Kedia’s sentiments regarding the benefits of investing during market downturns. Kedia, in a previously recorded video, emphasized that true financial gains are often realized when investors seize opportunities in bearish conditions. He remarked, "My experience aligns with this, especially regarding gold," suggesting that historical patterns reveal the importance of strategic investments during challenging times.
Market Recovery Amid Global Uncertainty
On the same day, Indian benchmark indices, Sensex and Nifty, surged over 2%, primarily fueled by the announcement from US President Donald Trump about a 90-day pause on tariffs. This news provided a much-needed reprieve for investors who had been jittery due to global economic pressures. Prior to this rally, the Indian market had faced significant declines, losing ground in four out of five trading sessions following the tariff news.
Making Money vs. Building Wealth
Kedia, in his insightful video, made a compelling distinction between merely making money and creating lasting wealth. He stated that significant earnings in the stock market often stem from investments made during downturns. Kedia pointed out that wealth is typically generated during crises, emphasizing that the true test of an investor’s mettle comes when the market is down.
Historical Lessons from Past Crashes
Reflecting on historical market crashes, Kedia cited instances like the Lehman Brothers crisis and the Covid-19 crash. Those who strategically invested during these periods experienced substantial gains. For example, during the 2008 financial crisis, the Sensex plummeted from 21,000 to 8,000 but later rebounded to its previous high by November 2010, marking an impressive 162% gain. Similarly, after the March 2020 low of 26,000, the Sensex soared past 60,000 by September 2021, and reached an all-time high of 85,978 in September 2024.
Bear Markets: Tough Educators for Investors
Kedia further elaborated on how bear markets serve as crucial educators, filtering out superficial investments and instilling valuable lessons in the minds of investors. He noted that many individuals enter the market during bullish phases, seeking quick profits, only to be swiftly disillusioned when a downturn occurs. He likened this to pushing a train that’s already in motion, stating, "You feel invincible," until the market shifts and reality sets in.
He concluded with a poignant saying: “Bhagwan deta hai toh chappar pgaad ke deta hai, leta hai toh thappad mar ke leta hai,” which translates to, “When God gives, He gives abundantly; when He takes, it’s with a hard slap.” This serves as a stark reminder of the volatility inherent in market investments and the importance of resilience during tough times.
By reflecting on these insights, investors can better navigate the complexities of the stock market and potentially capitalize on future opportunities, particularly during downturns.
