Timing the Market

A few random thoughts on timing the market-

• Experts advise that you should not change your SIP (Systematic Investment Plan). So if I can see the downward trend, should I not convert my investment into cash and defer my SIP? Should I allow the market to erode the value of my investment?
• Technical Experts say that the market is in a downward trend. Mutual Fund Managers and Brokers say it is a good time to buy, because now valuations are cheap.
• FII (Foreign Institutional Investor) is selling. DII (Domestic Institutional Investor) is buying because the domestic investor continues to put his money in mutual fund. Market is in a downward trend. Eventually the domestic investor will emerge victorious?
• Impact of demonetization will be short term. GDP growth will slow down. However, experts are estimating 10% growth in corporate earnings in current year and 18% growth in earnings in Financial Year 2018. So there will be a major shift in business from informal sector to the formal sector?

The Value Of Patience

As an Investor, you will face situations when you have lots of liquidity and you do not find reasonably priced Investment opportunities.

What do you do at such times?

You have to keep your patience & keep scouting for more & more opportunities & test them to check if they match your parameters. This is a true test for an Investor.Will you buy simply because you have the cash or will you wait until you spot the right target?

Have you ever seen wild life programs on television? The lion waits for hours until he spots the right prey; then he makes his move and pursues his target with full force until he succeeds or he finally realizes that the target is beyond him. An Investor can learn a great deal from such wild life hunts. You have to keep surveying the environment to spot the opportunities.

While you are waiting, keep doing your financial exercises. Calculate the future cash flows- your future savings – the prospect of ­­­­­­encashing your future savings by discounting them to its present value (yes, I’m talking about debt).

Preparation is what you do during the patience phase!