Feeling over the moon now that the Sensex has crossed 12000? Don’t. Because, although 12000 is certainly 1000 points more than 11000, the rise is just a mere 9.09 per cent in overall terms.
It had to reach this point someday, it’s just that it did so today.
It’s not the message you will get in tonight’s gung-ho TV bulletins or tomorrow’s newspapers when they wax eloquent on the 'India Story", but the truth is the larger the Sensex gets, the percentage rise will shrink at each milestone.
From 1000 to 2000 was a 100 per cent jump, but look at what each subsequent 1000-point really means in percentage terms.
2000-3000: 50 per cent
3000-4000: 33 per cent
4000-5000: 25 per cent
5000-6000: 20 per cent
6000-7000: 16 per cent
7000-8000: 14 per cent
8000-9000: 12.5 per cent
9000-10000: 11.11 per cent
10000-11000: 10 per cent
1000-12000: 9.09 per cent.
Some time soon, maybe this year, maybe next, 12000 will become 13000. But that will still be just a piddling 8.33 per cent jump. So cool it when you watch your stock portfolio.