Sanity in the markets....sideways trading

Sensex (from 2002 till date, weekly)

I have uploaded the Sensex chart since 2002. The chart indicates steady rise in the Indian economy since 2003. The market sentiment got euphoric in 2007 and Sensex touched 21000. Thereafter the correction brought down the market to 8000 level. This correction was also aided by the rare liquidity crunch faced by investors all over the globe. The yellow circles indicate that phase. We have now come out of this phase and chart is showing a steady valuation. The lower band is at 14000 and the upper band at 16000 (approx). We are going to trade in this zone for a while before global economies improve over the next few quarters.

Our strategy of buying during dips is sound. I have never been able to time the market. Staying invested helps me benefit from the sudden spikes in valuations. Over a long term ( 5 years and more) such spikes may occur on few selected days. Since we can not predict such events it is better to stay invested and benefit from them.

rgds
Vibhas