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Timing the Markets

It is almost 3 months since the markets hit a low on March 23 and since then most international and Indian markets have rallied up. I had written about the rising tide last week.

Liquidity continues to drive global markets. Concern about the disconnect between the economy and the markets has been voiced by several other experts and the latest to join them is Mohamed A El-Erian, chief economic adviser at Allianz, who said he is worried about Zombie markets - markets that are completely mispriced and distorted.

Howard Marks of Oaktree capital, in his latest memo, closes with " ....the fundamental outlook may be positive on balance, but with listed security prices where they are, the odds aren’t in investors’ favor."

Back in India, Nifty is just 18% below its highs and way above the lows seen towards March-end. Even a fracas at the border was brushed aside as markets moved from strength to strength.

Questions on timing rear its head at these times, more than ever!!

Should I sell my current holdings and wait for a correction to invest again? I have some extra cash and have I missed the rally? I had a hunch that the markets will fall in March and did not act on the hunch is back. Shall I sell now? What if the markets go back to 6000 levels?

Most of these questions are the same that one hears almost yearly at every fall or increase in the markets and they get accentuated at such uncertain times.

Timing the market is NOT our skill and I'm yet to meet one who has consistently done this.

After all, we know that the market hit a low on March 23 only on hindsight and not prior to or for that matter even during March 23. No one knows if the markets will go up or down in the short term and trying to invest based on this is only going to cause panic and angst.

I invest my money via SIPs in good funds and have consistently done this without worrying about the ups or downs. One of my many goals is to put money away for my daughter's education; she is currently 7 years old. I'm least concerned about the day to day or even monthly or for that matter annual moves. Her college education is 11 years away and I know that Equity is the right product for that. By choosing a consistent mutual fund managed by a good manager of a good pedigree fund house, I increase the odds of meeting my goal.

And that is the only thing I focus on.

After all, Investments are done with our goals in mind NOT the markets!!

The right question is NOT where will the markets go? That is one thing you cannot control!

The right questions are:

What are my goals?

What is the best way to achieve it?

Who is the best person to help me achieve this?

And once you have done all this, just Chill and focus on the things that you do well!!

Today is International Yoga day and this image from Motilal Oswal captures the right way of investing.

Source: Oaktreecapital, Moneycontrol, Motilal Oswal

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