Analysis of Equity Funds in 'Bear' Market

[Flash2talk]

Hai All,

The Sensex had reached 19,000.
Is it the right time to make investment in mutual funds.
Will the market crash to around 17000?

[karvy]

Yes, it is good time to invest in MF equity funds but through Systemstic Investment Plan route.

[Flash2talk]

Originally Posted by karvy

Yes, it is good time to invest in MF equity funds but through Systemstic Investment Plan route.

It is always good time to invest through SIP; i am asking about lumpsum investment

[karvy]

Originally Posted by Flash2talk

It is always good time to invest through SIP; i am asking about lumpsum investment

If you wish to invest in lumpsum , it is better to wait till the markets bottom out which can take a week or two .

[life2007]

Hello Friends !

Why do people recommend to stay in the markets even when the markets starts its down slide.

Let us take an example.

I got MFs of ABC which was purchased at 10 per unit and was running at
18 per unit last week. Now, due to current fall, the NAV has reduced to 12 from 18.

Had I redeemped it earlier when the first fall occured, I could have still redeemped it at about say 16.

It is quite easy to say, if you are long term investor, NAV will go back to 18 or even more than that. But the question here is, TIME is lost.

Layman thinking states that redeemp the fund at 16. Invest the surplus i.e Rs. 6 in any safe instrument with decent returns. Let the NAV of the fund go as low as possible, when it just starts climbing up, buy again and stay invested until the next correction occurs.

I know it is wrong, however, I wanted clarity on this .. therefore posted this stupid question. And there are many new bies here wanting to avoid the above error.

Thanks

Jeet

PS: I already know one of your responses would be .. You cannot time the market

[Venkat123]

Jeet,
The don't sell startegy is to make the retail investor think they are smart while the big boys are unloading.

[life2007]

Hello,

Ok some support to my thinking, the question after all does not look stupid

I would like to hear views from other members as well !! The idea is to come to some sort of conclusion wherein each and every member of this forum will benefit.

I also think our finance minister PC is not doing too good for many small investors by 'virtually' locking each fund for atleast one year (selling before one year invites TAX). What you say ??

Thanks

Jeet

Originally Posted by Venkat123

Jeet,
The don't sell startegy is to make the retail investor think they are smart while the big boys are unloading.

[trytrading]

i agree with venkat. though i am not too experienced a trader but what i had experienced from past is when the so-called analysts and other gurus of market say -- it is not the time to invest-- that is the most suitable time to invest. when the sensex was around 6000 or so (and i was still a student) someone from a MF house on CNBC told that the valuation are stretched and that was not the time to invest. (After that I did not see him for a long time). Only person I remember saying that, that was time to invest or for that matter sensex would go to 15k or 20k maybe was Mr. Rakesh Jhunjhunwala.
What I want to say it should be our decision to invest or to sell and that should not be based on some 'knowledgeable' person's thinking.

[trytrading]

Originally Posted by Venkat123

Jeet,
The don't sell startegy is to make the retail investor think they are smart while the big boys are unloading.

I more than fully agree with him. Its when everyone telling you to hold You have to see whether they have some malafide intention. Also one should invest based only on his/her decision. In such case he/she takes the total responsibilty for profit/loss.

[mrindia]

The stretegy of selling MFs at high NAV before mkt 'starts falling' & again repurchasing these whent NAV reaches its 'lowest' sounds theoretically interesting, but the fudamental on which its placed it totally unpredictable. i.e only issue is that nobody can predict which side the mkt is heading & to what extent it may go. You already know this answer, but i fear its the only answer
Your smart move may bite the dust if your calculations/speculation goes wrong. Any type of trading in volatile mkt is a wrong advice.
And remember, we are trading in mutual funds not stocks. We are paying huge ammount to "Fund Manager" to scratch his head in bull n bear run as well. So, in downslide, its fund managers skill to buy/hold/sell the stocks to deliver returns comes into picture. He is the person who decides what stocks to buy or sell. Collective aim is to give risk free returns.
No doubt NAV is also dependent on stock's performence, but every MF/Stock will be red in bear phase. Good funds register lesser losses during fall but loss is still there.
So in stocks/MFs, whosoever may time the market (thats mere by chance)feels himself a smart player
MFs due to large no of stocks in there folio are still less risky c.f stocks.

keep writing!

mr india

Originally Posted by life2007

Hello,

Ok some support to my thinking, the question after all does not look stupid

I would like to hear views from other members as well !! The idea is to come to some sort of conclusion wherein each and every member of this forum will benefit.

I also think our finance minister PC is not doing too good for many small investors by 'virtually' locking each fund for atleast one year (selling before one year invites TAX). What you say ??

Thanks

Jeet