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Investor A invests at lowest index level during the month (i.e. A has all the information);
Investor B invests at highest index level during the month (i.e. B mistimes the market every month!);
Investor C is indifferent to news flow and invests at month-end closing prices. Each one them has invested a total of Rs 7,20,000 in 144 months.
That is, if you are ready to invest in a disciplined manner for long term, having information and timing does not matter much. Even an indifferent person can make money by investing dispassionately.
- It should be understood that there is no point in trying to time the market. Though it has been tried by millions of people and people have made money and have become millionaires, the fact remains that it is neither easy nor feasible for a average investors like us.
- Timing is possible. But only for those who are part of the inner circle – people who have insider information.
- There is a difference between information and wisdom. An investor should be vary of all information being bombarded at him and one needs to be wise enough to filter out the noise.
- As a regular retail investor, it makes sense to keep on investing in a disciplined manner. The reason being that there is not much to lose (6% – Refer to above example) if an investor decides to ditch time-the-markets approach.
- But if you still think that its easy to time the markets, then its better if you stick with shares of companies which are robust and have withstood the test of economic cycles. And there is nothing better if you can buy shares of such Large Caps which are available at Huge Discounts)
And wish you all a Merry Christmas to all the readers!