![]() ![]() In the long-run stock market most definitely gives good positive returns. All the noise and fluctuations are for short term. In the long run, your holdings WILL survive through all the cycles of market and you will enjoy a good rate of returns for your patience along with the power of compounding which is the only confirmed way of wealth creation.Īnd if you choose to invest via SIP mode you can turn market volatility into a long term wealth creation opportunity.Īlso, markets rise over time. You are likely to have more success in the market if you decide to stay in for a long period of time. Therefore time in the market is a better option than timing the market. The question is why waste time, effort, resources and money on timing the market when the odds are so heavily against you? There may be some who find success by timing the market, just as some find success by winning the lottery. More money is lost in preparation or anticipation of a market correction than in the actual correction of the market itself. It’s even harder to predict when it will begin to go up. It is not possible to predict when the market has hit its lowest. Or you could wait too long waiting for that perfect time and miss the upswing of the market. Then the biggest challenge: when will you enter back into the market? How do you know how much correction will there be? Will you get back when the market falls 5%? Or 10%? Or 20%? Stocks could keep falling even after you buy back in. Will you place your money in conservative instruments and suffer through low-interest rates or will you select some other higher-risk instruments which may or may not work and possibly reduce your gains? But what if the market doesn’t tank and keeps on increasing for another year or so? You would lose out on some of the best performing months of the market.Įven if you get lucky and exit at the peak, you’ll have to figure out where to park the money until you decide to enter the market again. And you, using some calculation or indicators or believing a rumour, decide that it has reached its peak and is going to dive down. Say that the stock market has been rising for a few years. Let’s understand this with the help of an example: This is because to ace market timing strategy you have to ace its 3 components as well: In fact timing the market is usually a recipe for losing money. If it were truly possible to predict corrections, you’d think somebody would have made billions doing it.” “I can’t recall ever once having seen the name of a market timer on Forbes’ annual list of the richest people in the world. This fact doesn’t place much confidence in the concept of market timing, does it? But many investors keep trying to time the market, thinking that they can stay ahead of it and make more money. One can’t predict the future no matter how much research one does for that. The truth is no one has any idea what the market movement will be tomorrow. There is no fixed formula to correctly time the market. ![]()
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