Why I will continue to invest in equity even at 8K?

Warning: This post is more of personal rant, so that some time in future I can boast of "I-told-you-so". This post contains less of facts and more of personal opinion about the current economic ( and political! ) scenario. Take it all with a pinch of salt.


The Sensex is below the 9K mark and everyday I keep hearing predictions of even lower levels for the Sensex from friends and stock analysts. The US Dow Jones Index is at an 12-year low. All hell has broken loose. The newspapers are busy questioning the very survival of the Tata group companies. Gold is touching new highs and investors are being advised to buy Gold.

I don't care about these stock analysts who were predicting 25K for the Sensex in January 2008 and are now asking investors to stay away. Honestly speaking I don't care about Sensex at all, since I feel that Nifty is much better indicator of the market. I will continue to invest in equity via SIP, since I have been investing since the 18K level. If I was foolish to invest at 18K, I could only be a lesser fool if I invest at 8K. The downside is even lesser!

To quote Warren Buffet: "Be fearful when others are greedy and to be greedy only when others are fearful." Right now everyone is fleeing from the equity markets. MFs are showing a net outflow from equity schemes. All the bloggers I follow are advising people to stay safe ( Gold, debt instruments, cash ). If I ask my friends, whether they are investing in the equity market all I see is a grim face ( and sometimes a frown as well! ). People are frustated about their losses, even I am to a certain extent. But I haven't stopped my SIPs. I put in a small amount every month, in the hope that someday when the market recovers I will get back this invested amount along with good returns. When will the market recover? I don't know! But history tells me that recovery will happen.

Lok Sabha elections will happen in India in the near future, and I expect a sensible Govt to be formed in the Centre which will work to reduce the budget deficit. The present UPA govt has missed the FRBMA targets, and I expect the next government to put in more efforts to control it. But if the left parties come to power any time in future with absolute majority at the Centre, I am selling off all my equity investments ( even at enormous loss ) since I don't see any hopes for the Indian economy then.