Who said markets can’t be timed ?
1) We have been hearing about “time in the market is the only solution and timing the market is not possible”
2) There is nothing further from the truth
3) And if time in the market is the only reality then what is the role of the advisor
4) Such a simple formula obviously encourages going direct
5) So should one ignore the market and invest and forget for years in the hope that some day magic will happen
6) What kind of logic is this?
7) How much money can one invest with this kind of logic
8) Such thumb rules do not instill any confidence in the process of investing
9) Life is not just the long term. In fact life may not be there in the long term
10) Notional loss is real loss till recovery happens
11) Nothing can be worse than allowing volatility to take charge of our hard earned money
12) It may be difficult to accurately time the market but the one certainly can come close to it
13) Mindful investing versus mindless investing
14) Even a doctor can’t accurately predict an outcome
15) But what are specialists for
16) Value of Markets are measured by its PE levels
17) Market Valuations are an indication whether it is in the buy or sell zone
18) When markets crashed in 2008 and during March 2020, was it not the TIME to buy
19) When PE of markets are at a all time high of above 40 as compared to a ten years average of 19, isn’t it time to switch to debt assets?
20)And let’s also be mindful that high and low PEs are not a fleeting phenomena. In fact the period of such events sustain over months giving one ample time to rebalance the portfolio
21) What is the premise of BAF, Asset Allocation Funds etc.? Are these algorithms not based on timing the market?
22) Factors such as Interest rates, profit growth, corporate guidance, inflation, quantitative easing, fiscal deficit, currency valuations, CAD etc. are all leading indicators and markets do react to them
23) Doesn’t preventing drawdowns (loss) during a market crash by switching to debt fund during the red zone (expensive) market period help immensely?
24) A 50% fall requires a 100% rise just to reach the same level. So while one is recovering the smart investor has doubled his assets by going from 100 to 200 because he had avoided the drawdown (fall)
25) Markets can certainly be timed although I would concede that they cannot be timed accurately. However that does not prevent us from benefitting from the science of market valuations
26) Asset Allocation and Rebalancing is the tool that helps to make the medium and short term profitable too besides protecting the long term
27) The long term good should not always come at the cost of short and medium term experience
28) As a practitioner, one needs to graduate to scientific methods instead of following thumb rules
29) News and Thumb Rules tend to simplify too much
30) Thumb rules are ok while investing Rs 1 lac but the same does not apply when the Investment amount is say 1 Cr. Or say 5 Cr.
31) The only sustainable long term rule that works is “Be Greedy when others are Fearful (March 2020) and be Fearful when others are Greedy (Feb 2021)
32) This time is not any different than what history has repeatedly recorded
33) Be Mindful investor and not Mindless one