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Stock markets at record peak: Is it time to hold or fold?

 


Stock markets at record peak: Is it time to hold or fold?

It is not unusual for the stock index of a growing economy to reach new peaks. While the journey is not linear, an informed and seasoned investor who has set a summit in terms of a long-term financial goal will not abandon the climb just because he has reached an interim peak or has to cross over a trough in between.

In the investing world, those troughs are the pockets of uncertainty and anxiety characterised either by a lack of information or our inability to process it. Exiting long-term equity portfolios during these periods of uncertainty is akin to a climber abandoning his climb only because fogs of uncertainty restrict his vision of the next peak or the final summit.

Currently, we are around 9% higher than the previous market peak during January 2020. For a usual year, this isn't a standout performance yet. However, it's a whopping 77% higher than the March 2020 low point. So, what is driving this rally and what should investors do?


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