What If Stocks Don’t Go Up for a Decade?

Value Investing Workshop in Chennai, Bengaluru, Mumbai: Before we begin, a quick personal note. I’m bringing my full-day offline Value Investing Workshop to three cities this September. I run it in each city just once a year, so this is your window for 2026.

• Chennai — Sunday, 6th September
• Bengaluru — Sunday, 20th September
• Mumbai — Sunday, 27th September

Each is a full day, 10 AM to 5 PM, kept to a small room of around 40 people so I can actually get to your questions. It’s a day on the principles, frameworks, and mental habits of sensible value investing, no tips, no jargon, just the thinking that helps ordinary investors build wealth slowly and stay calm through every market. Whether you’ve never bought a stock or have been at it for years, you’ll leave able to do the work yourself.

The early-bird seats have now filled. The next 20 seats in each city are still open at discounted prices. Once those go, the price steps up, and once a city’s room is full, that’s it until next year.

Click here for details and registration.

Now, on to today’s letter.

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Imagine it’s 2036. You opened your first demat account during the COVID lockdown of 2020, like a lot of young people in India did. And then, you did everything you were told to do.

You SIP-ped every month, ignored the noise, thought in decades and not days. You heard it from your mutual fund’s ad, from the finance guy on Instagram, probably from me too, at some point, in some post.

Now it’s fifteen years later. And your portfolio has grown. Just… barely. Something like 3-4% a year. Less than the fixed deposit your parents kept nudging you toward all along, and with none of its peace of mind.

The markets did not crash during this period. And India did not see a major financial scam. In short, there was nothing dramatic to shake your portfolio. Just that, for fifteen years, the markets mostly crawled, with enough good years mixed in to keep you hopeful, and enough dull ones to eat them up. And worse, the good years mostly showed up early when you’d barely invested anything. The dull years came later, once your money was all in. So, while the market’s own chart looked respectable, your returns did not.

Now for my question: How would that feel? And, do you think it could actually happen?

I ask because I think most of us, me included, have over time stopped treating “stocks go up in the long run” as a probability and started treating it as a law of physics. Stock prices have become something closer to gravity than to a historical pattern that has held often, but not always, and not everywhere.

And I understand why. It’s a useful belief. It gets people to save instead of splurge, and not do something stupid in a panic.

I’ve said some version of this sentence to readers myself, and I’ll probably say it again, because most of the time, for most horizons, it has been true.

But then, “has been true, most of the time” and “is guaranteed” are very different points of view. And, somewhere, over time, the first one has turned into the second.

Charlie Munger said:

Never, ever, think about something else when you should be thinking about the power of incentives.

Hold on to that idea from Munger and think about this for a moment. Almost everyone telling you stocks always go up in the long run eventually has some reason (incentive) to want you to believe it. The mutual fund companies earn more when you invest more. The financial advisor’s business depends on you staying in. The trading app, even the one selling you a ‘zero cost’ scheme, makes money on your activity.

And me? I’m not selling you a fund, but an educator like me needs you interested in markets to keep reading, to keep watching, and to keep buying the books and courses. If you decided equities were a coin flip and walked away, my little world gets smaller too. So don’t exempt me from this list just because I’m the one writing it.

Now, I don’t think anyone’s lying. But I also don’t think anyone in that chain is financially motivated to bring up the exception. It’s not good marketing to say “usually, but not always, and possibly not for a very long while.” And so, it gets left out.

And it has happened. Japan’s stock market peaked in December 1989 and didn’t get back to that level until 2024. Thirty-four years. That’s not a story about a bad economy or bad companies, for Japanese companies were, at the time, considered among the best-run in the world. It’s a story about what happens when a very good thing gets bought at a very high price and then has to spend decades being worth what it was actually worth.

Leave Japan aside, and look at Hindustan Unilever. Nobody disputes that it has been a good business all these years. And yet, for most of the 2000s, close to a decade, the stock went almost nowhere, even as the business kept doing everything right. The price had simply run too far ahead of itself around the year 2000, and then spent years slowly growing back into its own valuation. Rakesh Jhunjhunwala, who loved the business, used HUL to make exactly this point, that even a great company can be a poor investment if you pay too much for it.

Now, some of you are already reaching for the obvious fix, that a lot of people are selling right now. Just diversify globally. Don’t bet the whole thing on India. And that sounds fair, because if you’d owned the whole world in 1989, Japan’s long sleep would have been a footnote in your portfolio instead of the whole story. So yes, spreading across countries lowers the odds that any one nation’s dull decade becomes your dull decade. I’m not against it.

But notice what it fixes and what it doesn’t. Diversifying across geographies protects you from a bad country. It does nothing about a bad price. Japan and HUL, underneath, were never really stories about the wrong country or the wrong company. They were stories about paying too much. And you can overpay for a basket of the entire world just as easily as you can overpay for one index.

So take global diversification for what it is, which is a way to nudge the odds in your favour, and not the new kind of promise. Because it’s being sold to you with the very same certainty, by people with the very same kind of incentive (there’s a fund or portfolio service to sell you either way). It lowers the risk. It doesn’t abolish it. Same as everything else here, it’s a probability, not a law.

Now, I’m not bringing this up to say “and it’s about to happen to your stocks or the markets in general.” I have no idea if it will. Nobody does, including the people who sound confident about it either way. I’m bringing it up because it’s real, and most of us have simply never been told it’s possible.

Which brings me to the part that worries me a little.

A huge number of you reading this started investing after 2020. India’s demat account count has gone from around 4 crore before COVID to close to 24 crore now. That’s most of the current investor base having entered the market in the last six years, which is also a window that, despite a sharp crash and a couple of corrections, has broadly gone up.

Which means a lot of people currently investing have a mental model of “how markets behave” that was built almost entirely during a period that behaved unusually well. Just because they haven’t had a reason yet to find out what the wrong thing feels like.

I really don’t want this post to read as “be afraid, the crash is coming.” I have no special knowledge of that, and I’d rather you stayed invested and calm than got clever and got out. That’s not the point.

The point, I think, is smaller and more useful than a prediction.

It’s this: don’t build a plan, both financial and emotional, that only works if the promise turns out to be true. Build one that survives even if it isn’t.

Invest an amount you can actually leave alone for a decade that barely earns higher than an FD, not just a decade of a one-way climb.

Expect the returns to come in an unpredictable lump somewhere in the middle of your holding period, and not as a smooth elevator ride up.

And when someone tells you stocks/equities always go up eventually, it’s fine to nod and keep investing. Just don’t let that argument do the work that your own plan should be doing.

I don’t know if the next ten years look like the last five, or like Japan’s, or HUL’s, or like something nobody’s written about yet. Nobody does. I just think it’s worth asking yourself, once in a while, a version of the questions I started this post with: If the next decade gave you less than your FD would have, would your financial plan survive it? Or does it only work if the ‘stocks always go up’ story everyone’s selling you turns out to be right?

One final thing before I leave you. None of what I’ve written here is an argument for staying out of investing in equities. If you take “stocks can disappoint for a decade” and turn it into “so I’ll just sit in cash,” you’ve picked the one option that disappoints almost every time.

Cash feels safe and slowly loses to inflation, year after year, and you don’t get to know in advance whether you’re living through the good decade or the dull one.

So the idea here was never to invest less. It was to invest better. Keep going. Just build the kind of plan, and the kind of expectations, that can live through a bad stretch without breaking, or breaking you.

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