Time In The Market
Introduction
The mutual fund industry has been very good at marketing its products and one of its famous advertisement campaigns focuses on educating investors about a long-term investment mindset.
For example, in this ad, Rohit Sharma is seen preaching Shreyas Iyer that instead of “timing the market”, he should focus on the “time in the market”.
In other words, instead of buying low and selling high, we should just invest every month no matter what the market does because eventually, the market will go up.
So, how true is the message?
Well, as it turns out that like any advertisement, the claim made here is partly true, partly false. Why?
Because, staying invested in the market is good, of course, as any experienced investor would tell you but that time should be spent in the right market, in the right index, or in the right sector. For example, if someone invested in index funds based on SENSEX or Nifty 10-20 years back, they would make handsome gains by now.
But that is not true with most of the stocks in India and even indices across the world.
Take, for example, Japan and Korea. The investors of these countries were also shown the same dream by their mutual fund companies but the harsh reality is that the long-term SIP investors of these countries have generated a negative return over 20-30 years.
In fact, the only investors who made money in these markets were those who timed the market by buying low and selling high.
So, then the question comes: why are these mutual fund companies claiming that “time in the market is good”, well because that message helps them in building a steady stream of SIP income…it’s good for their business.
But what’s good for them may not be good for the investors.
So, the point I am trying to make is that don’t blindly follow any advice in the stock market; do your research before investing.
Neither Rohit Sharma nor Sachin Tendulkar nor MS Dhoni became rich by investing. They mastered their game and so should you.
Key Takeaways
- Selective Long-Term Investment:
- Long-term investing is beneficial, but success depends on choosing the right market, index, or sector.
- Not all markets support the “time in the market” strategy.
- Global Examples: Japan and Korea
- Contrary to the marketing claim, long-term SIP investors in Japan and Korea faced negative returns over decades.
- Timing the market proved more profitable in specific situations.
- Critical Thinking Over Blind Following
- Caution against blindly following mutual fund slogans.
- Emphasizes the need for independent research before investment decisions.
- Celebrity Endorsements vs. Financial Success
- Sports icons like Rohit Sharma, Sachin Tendulkar, and MS Dhoni didn’t accumulate wealth through investing but through mastering their fields.
- Warns against assuming wealth accumulation by mimicking celebrity choices.
- Informed Decision-Making:
- Encourages investors to be well-informed and not rely solely on generic market advice.
- Rejects the notion that staying invested guarantees financial success.
- Highlights the importance of understanding markets and making informed choices.
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Time In The Market
Introduction
The mutual fund industry has been very good at marketing its products and one of its famous advertisement campaigns focuses on educating investors about a long-term investment mindset.
For example, in this ad, Rohit Sharma is seen preaching Shreyas Iyer that instead of “timing the market”, he should focus on the “time in the market”.
In other words, instead of buying low and selling high, we should just invest every month no matter what the market does because eventually, the market will go up.
So, how true is the message?
Well, as it turns out that like any advertisement, the claim made here is partly true, partly false. Why?
Because, staying invested in the market is good, of course, as any experienced investor would tell you but that time should be spent in the right market, in the right index, or in the right sector. For example, if someone invested in index funds based on SENSEX or Nifty 10-20 years back, they would make handsome gains by now.
But that is not true with most of the stocks in India and even indices across the world.
Take, for example, Japan and Korea. The investors of these countries were also shown the same dream by their mutual fund companies but the harsh reality is that the long-term SIP investors of these countries have generated a negative return over 20-30 years.
In fact, the only investors who made money in these markets were those who timed the market by buying low and selling high.
So, then the question comes: why are these mutual fund companies claiming that “time in the market is good”, well because that message helps them in building a steady stream of SIP income…it’s good for their business.
But what’s good for them may not be good for the investors.
So, the point I am trying to make is that don’t blindly follow any advice in the stock market; do your research before investing.
Neither Rohit Sharma nor Sachin Tendulkar nor MS Dhoni became rich by investing. They mastered their game and so should you.
Key Takeaways
- Selective Long-Term Investment:
- Long-term investing is beneficial, but success depends on choosing the right market, index, or sector.
- Not all markets support the “time in the market” strategy.
- Global Examples: Japan and Korea
- Contrary to the marketing claim, long-term SIP investors in Japan and Korea faced negative returns over decades.
- Timing the market proved more profitable in specific situations.
- Critical Thinking Over Blind Following
- Caution against blindly following mutual fund slogans.
- Emphasizes the need for independent research before investment decisions.
- Celebrity Endorsements vs. Financial Success
- Sports icons like Rohit Sharma, Sachin Tendulkar, and MS Dhoni didn’t accumulate wealth through investing but through mastering their fields.
- Warns against assuming wealth accumulation by mimicking celebrity choices.
- Informed Decision-Making:
- Encourages investors to be well-informed and not rely solely on generic market advice.
- Rejects the notion that staying invested guarantees financial success.
- Highlights the importance of understanding markets and making informed choices.
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