Only Six of 1990’s Sensex Stocks Survive: S Naren’s Case for Smarter Asset Allocation
Most investors believe that if they simply hold on long enough, a fallen stock will bounce back. S Naren, the chief investment officer of ICICI Prudential Mutual Fund, has a blunt warning for anyone who thinks that way. Speaking at the ET Wealth Expo, he pointed to a striking fact: only six of the companies that made up the Sensex in 1990 are still part of the index today.
That number is worth pausing on. The Sensex is India’s most watched stock market benchmark. In 1990, it tracked a small group of leading companies. More than three decades later, almost all of those original names have dropped out. Some were overtaken by rivals. Some shrank. Some simply disappeared from the market.
Why Fallen Stocks Often Stay Fallen
Naren’s point is simple but uncomfortable. A stock that has fallen a lot does not automatically recover. Investors often assume that a beaten-down share is “cheap” and bound to come back. But many of these companies never do. The business may lose its edge, face new competition, or fail to adapt to a changing economy.
The 1990 Sensex list proves the point. The companies that survived had to keep reinventing themselves. The ones that did not are gone from the index. An investor who held those stocks hoping for a comeback may have waited forever.
This is not a rare event. Stock markets around the world show the same pattern. The leading companies of one era are often replaced by newer names in the next. The Dow Jones Industrial Average in the United States has changed its members many times over the decades. Being a market leader today is no guarantee of being one tomorrow.
Asset Allocation Is Not the Same as Stock Selection
Naren used this history to draw a clear line between two things that investors often confuse: asset allocation and stock selection.
Stock selection is about picking individual companies. It requires deep research and a strong view on which businesses will win. Even experts get this wrong often. Asset allocation is different. It is about spreading money across broad groups, such as equity, debt, and gold, and across many stocks rather than a few.
The lesson from the 1990 Sensex is that betting on a single company is risky over long periods. Spreading money across a wide basket of stocks, or across different asset classes, protects you when some names fail. You do not need every stock to win. You just need the overall portfolio to do well.
Do Not Chase Strong Past Returns
Naren also warned against a common mistake: chasing assets that have done very well in the recent past. When one sector or fund posts strong returns, money tends to rush in. But past performance does not repeat automatically. Often, the best time to buy an asset is when it is out of favour, not when it is flying high.
This ties back to asset allocation. A disciplined investor rebalances regularly. When one part of the portfolio grows too large, they trim it. When another part falls behind, they add to it. This simple habit forces you to sell what is expensive and buy what is cheap, without trying to predict the future.
What This Means for Ordinary Investors
The takeaway is practical. Do not build your financial future on the hope that a few fallen stocks will recover. Do not assume today’s winners will stay on top forever. Instead, focus on a sensible mix of assets, keep costs low, and stay invested for the long term.
As Naren’s example shows, survival in the market is rare. Only six of the 1990 Sensex companies are still standing. Smart asset allocation helps you ride through that kind of change without betting everything on a single name.
