FINANCIAL PLANNING : A Reality Check

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Friday 26 June 2009

Financial Planning mantra #8

Never try and time the market. You may get it right a few times, but more often than not you will be wrong.

Be a regular and disciplined investor. Even the wisest cannot predict the market. Warren Buffet lost billions in the crash of 2008. Ratan Tata went on record saying that if he had known of the coming slump in global markets, he would not have gone ahead with the Corus and JLR deals, at least not at the prices that he paid. In 2008, when the Sensex slumped from 22000 to 8000 every equity fund slipped by at least 50%. When the markets rose by 50%, from 8000 to 12000 most funds managed only a 15-20% upside.

What I am trying to get to is that even the best of the best in the business find it impossible to predict such movements. As a retail investor you don’t stand much of a chance of being correct. Even if you manage to catch the downside or the upside, it is more a question of luck than any skill.

2 comments:

Unknown said...

you are so right, but what about those few guys who come together to regulate few scripts. they buy when the script is down in huge numbers & after reaching a certain number they sell it at a high price.
These investors make huge profits, but comman man gets stuck by buying stock at that high price, which is not going to been seen for long now.....

Mita
www.forum4finance.com

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