Shankar Sharma Says, ‘There Are NO Great Investors, ONLY Great Bull Markets’ Amid Ongoing Selloff in Indian Stock Market”
Shankar Sharma : The Indian stock market is currently grappling with one of its toughest phases in recent history, with the portfolios of many investors flashing red. Amid this volatile market environment, ace investor Shankar Sharma took to social media to make a statement that has resonated deeply with market participants. On Tuesday, February 18, Sharma posted on X (formerly Twitter): “There are NO Great Investors. There are ONLY Great Bull Markets.”
This statement by Sharma highlights the profound impact that prevailing market conditions—particularly bull and bear markets—have on investor performance. While many investors may have gained significant returns in the past, especially during bull runs, it is essential to recognize the role of the broader market sentiment in driving returns. Essentially, the performance of an investor’s portfolio is often more reflective of the market’s direction than the investor’s acumen.
Bull Market vs Bear Market
To understand Sharma’s viewpoint better, it is essential to differentiate between a bull market and a bear market. A bull market is characterized by rising stock prices. During such periods, even a novice investor can achieve remarkable returns, as almost every investment appears to be a winning bet. Stocks are in a sustained upward trend, making it easier for investors to make profits, regardless of their strategies or level of expertise.
In contrast, a bear market is marked by a decline in stock prices. In such a market, it becomes much harder to achieve gains, as negative sentiment and economic factors weigh heavily on stock prices. Even experienced investors find it challenging to navigate through bear markets. The prevailing conditions often dominate the market sentiment, pushing stock prices lower and leading to widespread losses.
The post-Covid era in the Indian stock market can be categorized as a bull market. During this period, stocks—regardless of whether they had strong fundamentals or high valuations—were often rewarded with massive gains. This created a favorable environment for investors, with even mediocre or riskier stocks seeing significant price increases. However, as we enter 2025, the tide has turned, and the Indian stock market is facing headwinds.
The Ongoing Selloff and the Erosion of Wealth
The Indian equity benchmark indices are currently at multi-month lows, having dropped by 13% from their all-time highs. The broader market has been hit even harder, with stocks down over 20% from their peaks, signaling the onset of a bear market. This recent downturn is a clear indication that the prevailing conditions are no longer conducive to easy profits.
Experts have pointed to several factors that have contributed to this market downturn. High valuations, disappointing earnings, and growing economic uncertainties have all combined to create a “perfect storm” for investors. Additionally, the recent political events have added a layer of unpredictability to the market, bringing some much-needed correction to the irrational exuberance that characterized the market in previous years.
Despite the downturn, the impact on India’s top investors has been profound. Several of India’s biggest market players have seen a significant erosion in their wealth, with losses amounting to as much as ₹69,000 crore. This is a direct testament to Sharma’s point: even the most seasoned investors are not immune to the effects of a bear market. The absence of a strong bull market tailwind makes it incredibly difficult to achieve outsized returns, no matter how skilled an investor may be.
The Reality of Bear Markets
In bear markets, it is not just novice investors who face the heat. Even experienced investors and fund managers often struggle to maintain positive returns. As Shankar Sharma aptly pointed out, individual brilliance takes a back seat when market conditions dictate the direction of the portfolio. In these times, the market’s momentum—whether upward or downward—plays a more significant role in portfolio performance than an investor’s strategy.
The current market correction serves as a reminder that stock market success is not always a reflection of one’s investing prowess. In many cases, it is a combination of market timing, understanding of macroeconomic factors, and the ability to adapt to changing market conditions that contribute to success.
Key Financial Ratios for Indian Stock Market Investors
Investors often rely on key financial ratios to evaluate the health of a company and its prospects in the stock market. Here are some important ratios that investors should consider during volatile market conditions:
| Financial Ratio | Description | Importance in Current Market |
|---|---|---|
| Price-to-Earnings (P/E) Ratio | Measures the price investors are willing to pay for a company’s earnings. | Helps assess if a stock is overvalued or undervalued, especially in a bear market. |
| Price-to-Book (P/B) Ratio | Compares a company’s market value to its book value. | Indicates whether a stock is undervalued or overvalued, which is critical in times of uncertainty. |
| Debt-to-Equity Ratio | Indicates the level of a company’s debt compared to its equity. | A lower ratio is preferred in bear markets, as companies with excessive debt may struggle. |
| Return on Equity (ROE) | Measures a company’s profitability relative to shareholders’ equity. | High ROE is a good indicator of efficient management, especially in difficult times. |
| Dividend Yield | Represents the income generated from dividends as a percentage of the stock price. | A higher dividend yield can provide stability in bear markets. |
Conclusion
Shankar Sharma’s statement serves as a crucial reminder for investors to keep market conditions in perspective. While skill and strategy play a role in investing, market trends, particularly the cycle of bull and bear markets, ultimately shape the returns that investors achieve. As the Indian stock market continues to face challenges, it is more important than ever for investors to stay informed, adapt to changing conditions, and understand that sometimes even the best strategies may fall short in a market dominated by bearish sentiment.
As we navigate through this turbulent phase, it is essential for investors to remain cautious and resilient, knowing that the market’s cycle will eventually turn, as it always does.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.