At the time of the 2008 financial crisis, the Nifty50 had lost more than 50 per cent in a single year and eroded wealth of most of the investors as they scrambled to exit in panic and booked huge losses in the process. The markets made a sharp recovery the following year when the Nifty returns were approximately 75 per cent. At its bottom in October 2008, the Nifty50 had touched 3,096 whereas it today stands at 10,650, which amounts to an absolute return of approximately 240 per cent.
There is, however, a word of caution that investors need to be cognisant of -- buying right and sitting tight does not mean that investors turn a blind eye to their investment portfolios. A portfolio should be monitored at regular intervals -- and if things have materially changed, affecting the investment thesis for a particular stock, then one should not sit tight or do nothing. An immediate remedy in these situations is to exit the particular stock, even if it means incurring losses.
