Is Index Investing Safe ?

Today’s Daily Byte

Markets are in bad shape today for a variety of reasons. One major factor could be that the US is pushing for more tariffs. Trump seems determined to engage in a tariff war with almost everyone. Our Prime Minister is likely to meet him in the next few days, and hopefully, they will negotiate something that isn’t too detrimental to Indian interests. This is one of the concerns hanging over the market right now.

On the positive side, the budget has brought some good news, along with the change in government in Delhi, which may create fewer obstacles for economic reforms. However, despite this feel-good atmosphere, the market has not reflected it positively. To make matters worse, one of the most senior fund managers has recently come out to caution about the markets. We’ll delve deeper into this in the video linked below !

Reading Time : 7 Minutes

Sensex Struggled to get past this Resistance !

Many people believe that investing in an index is a safe and foolproof way to grow wealth. While index investing has many benefits, it is not without its risks. This chart shared by Zafar Shaik highlights how market cycles can lead to long periods of stagnation. For example, during the Harshad Mehta rally of 1988 to 1992, the market surged nearly five times in just four years. If a similar rally happened today, Nifty would jump from its current level to over 25,000 in a very short time. However, after such rapid growth, the market needs time to adjust, and corrections can take years or even decades.. . . . .

Reading Time : 4 Minutes

How long is this going to be sustainable ?

Charlie Bilello has shared an insightful chart that highlights how certain stocks have grown so large that their market capitalization is now bigger than that of entire countries. The chart compares the weight of various nations in the FTSE Global All Cap Index, showing Japan at 5.6%, the UK at 3.4%, China at 2.9%, and Canada at 2.7%. However, when you compare this with individual stocks, Apple alone has a weight of 4%, and Microsoft is at 3.6%. This means that some of the biggest stocks in the world are now more significant than major economies.. . . . .

Reading Time : 3 Minutes