I am not sure how this chart is useful at all unless we expect smallcap index and Sensex to give same returns over long period. If one of the index gives even couple of % higher CAGR over decade+, the ratio will get skewed in favor of that index.
Same applies to S&P 500 vs Gold chart that get’s shown many times. These are typical cases of torturing the data to reveal what you want.
The rebound time is also incorrect since it leaves out dividends. We should be checking Total Returns Indexes. I have Nifty 50, Nifty Next 50 and Nifty Midcap 150 Index TRI data in front of me. Post 2008 January Peak, Nifty TRI took 33 months to cross previous highs. Nifty Next 50 TRI took same 33 months and Midcap 150 TRI took 76 months (it reached 90% of previous peak in same 33 months). Long periods but nothing as long or as dramatic as 9 years.
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