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I have been asked by many friends, family, relatives, clients, and whomever I meet at the party the market is, “ All-time high”, “Ab Kya lagta hai”.
Most investors are trying to time the market, especially those who have repeatedly heard, “Buy Low, Sell High” it’s an unrealistic endeavor. Even if you have savings and the thought of investing especially when the market is at an all-time high can give you second thoughts on investing.
I have met more people who repeatedly tell me, “This is a TOP”.
Investing in the Stock Market when it’s at the Top is so counterintuitive that many people who delay their investment miss on the opportunity to invest.
Indian Stock Market history is very recent when compared to the other developed markets, for the same reason I share the Dow history chart below which shows how it has fared from the year 1900.
Pessimist Bears have been occasionally been right, positive bulls have made the real money. It’s high time we start behaving like matured investors.
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”
Peter Lynch
Now JP Morgan had researched the difference in return when the investor invested on any random day compared to when the market is at an all-time high. The results surprised many investors.
How to deal with the market when it’s at an all-time high?
Most of our clients are aware we don’t go for SIP - Systematic Investment Plan but we go for OIP - Opportunistic Investment Plan.
By investing in high-quality, long-term growth companies we are happy if the market corrects, it allows us to invest more. Every dip in the market is an opportunity to invest more.
Most of our clients are eagerly waiting for OIP.
History has many lessons to teach us. One of the most important lessons that the history of investing has taught us is, “ More the number of years you stay invested in the stock market, the risk of losing money decreases”
Staying invested is the KEY, if you had missed just 20 best days in the last two decades of investing your returns would be less than the returns of Fixed Deposit in a Bank. This is the main reason why trying to time the market always costs dearly.
I will share with you the returns table if you miss the best days of the stock market performance what kind of returns one can expect.
Just by missing the best 30 days in the last 30 years, your returns would be 5.10% CAGR which is below the returns of the Fixed Deposit. Technically it will wipe out 70% of the possible gains from the stock market.
Currently, I don’t get sleep in the night just with the thought that I should not miss out on the next Infosys or TCS opportunity.
Next newsletter I am going to write something even more interesting and relevant in today’s market scenario.
I hope I can change your mind when it comes to investing in the stock market when it’s at an all-time high. Even if one person changes his mind about investing after reading this newsletter I would have succeeded in my endeavor.
Hit that 💚 if you liked today’s issue.
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