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Two monks were traveling together. One their way, they came to the bank of a river and found that the bridge was damaged. They had to walk through the river. A lady was standing on the banks and asked for help. The elder monk carried her across the river on his back. The younger monk was shocked by this conduct of carrying a lady on his back, but he kept quiet. When they crossed the river, the monk let the lady down and they parted ways. All along, the younger monk got more and more angry about this but kept quiet. Finally, he burst out at the elder monk, “How can you claim to be a monk, when you know we cannot touch a female. All your teachings were just hypocrisy.” The elder monk looked surprised and said, “I had put down that lady at the river bank many hours ago, how come you are still carrying her along?”

Even in investing we often carry the past. The fall of 2008 is a classic case. After the lull in the Sensex post the dot com bust of 2000, it entered a major bull run from 2003 to 2008 (see graph) to rise over 6 times before succumbing to the global financial crisis. It fell 61% from its peak and many refused to look at the markets then on. Perhaps no one had seen such a major fall after such a long bull run. It was funny, but some even went to the extent of discontinuing business newspapers only to realise that the fall was shortlived and the market recovered again. In the 10 year span from 2003 to 2012, the markets saw 2 upcycles and one major downcycle. In the next 10 years (2012-2021), the markets have seen a 3 fold rise from 20,000 to 60,000. The markets thus teach us that we should stop ‘carrying’ the past in our head and stay invested to create wealth over the long run.

Past performance may or may not be sustained in future. Source: BSE