Monday, January 12, 2009

Timing the Market?

One boarder in Moneycontrol wrote a lengthy letter proclaiming that "Timing your Buying and Selling would make you a millionaire".
I was shocked. Is it so easy?. If it was so, no one would do any work. They would come to the stock market and earn millions. so, I had to respond.

And, this is my response

I appreciate the effort you have put in your message to explain the people about timing the market.
But, tell me dear, how many will get the timing right?. Even a genius will not have 100% record. Even a 50% record is doubtful.
For timing the buying at the lowest levels, and selling at the highest levels, is next to impossible. It is not possible even for you Mr.Goldchest, otherwise you would not be writing 5 Star Rated Messages here.
For timing the market, you should keep your eyes and ears open to what is happening at all levels, local, national and international.

For instance, at present, it is very clear that the international economic and political situation is pretty unstable because of the huge speculation in oil futures by sovereign funds, hedge funds and pensions. petroleum prices at the international levels are bound to go up leading to more increase in oil prices and dampening of the markets across the world.

But, there could be some good news which would take the wind out of the all bad news and make the BULLs back in favour.
Neither I nor U or anyone else. Just a year ago, the great subprime crisis was come to notice all of us during these same months of July-August. From then on our markets made a one way northward journey. Peaking every 1000 points now & then within 10-15-20 days & breaking all prev. records but at the same time, all so called experts were busy in calling the great indian decouple story. That out country is no longer dependent of FII or global cues or any other thing like that. Now after the crash, every one is talking about some more downfall from current levels. So what do you do?

Being in Mutual fund industry, I may be baised towards Systematic Investmatic Plan, but there is no other method of investing in the Equity Markets, which can deliver you above average returns. Regarding benefit of investing thru SIP, my dear friend SIPs r more beneficial in a downward market than in a upward market as SIP invested on every new fall 'll bring ur purchase price down.

Of course, there are various methods of earning high returns and the methods keep increasing day by day. Our job is to ensure, that the high returns we are looking should not be at the cost of capital itself

If Predictions were correct, all of us should have SOLD our Invesments in 1st week of January 2008. In that case nobody would have BOUGHT any Stock anticipating BIG FALL.

Please DO REMEMBER that SELLER is selling because he feels that Stock will not Go up Further. At the SAME TIME BUYER feels that Stock is likely to go up.

Stock Price MOVEMENT is result of COLLECTIVE Psycological Behaviour of THOUSANDS of Investors(SELLERS & BUYERS).

If you are buying at 10000 Levels Expecting Gains, Seller is selling because he feels Enough loss he has suffered & there is no Profit Expected.

Sorry, if I am wrong. I solicit your response.
Best of luck,
Also visit for an indepth Equity Analysis

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