Sensex all Time High – 20893

Sensex all Time High level of 20893

Finally today the Sensex ends at all time high level of 20,893. In January 2008, its last all time high level was something around 20,870 (I don’t remember the exact figure).

So now, there are three kind of advises that personal finance gurus are giving to their followers.

01) Exit and Book Profits

02) Wait for the Correction

03) Stay Invested and Invest More

Well, let me tell you that the investment advises from so called experts have no value. This is because they are purely based on the past performance of the Sensex.

Today the rules of money have been changed. The US Government has announced on 2nd November 2010 that, it will print more US $ 600 Billion out of thin air (US $ 75 Billion every month now onwards) known as Quantitative Easing 2 (QE2) in sophisticated language.

Thus, now just think with your common sense. What will happen if we print more money? Obviously, the newly printed money will dilute the purchasing power of the existing money from the economy causing inflation/hyperinflation.

Thus, now more money is there in the circulation which is chasing the same amount of goods and services in the economy. Thus, India will notice a more capital inflow in the year 2011 (Remember that, this capital inflow is the newly printed money by the US Government out of thin air.) and this will drive the Sensex to new high levels.

So I personally advise people to stay invested in the stock market and even invest more money in it. Up to the end of 2011, the stock market has to rise. And this is a common sense and not any rocket science.

The thing is that, unless the central banks and governments from all around the world won’t stop printing new money, the Sensex has to go higher and higher.

When the US government will start absorbing liquidity (newly printed money) from the circulation, the Sensex will collapse. But that time won’t come in the near future.

So Invest in Equity and enjoy the great return from the Indian stock market.