Buy on dips
- Thread starter drsambu123
- Start date
I have always advocated on using mutual funds for buying on dips. Having said this, I have major chunk of investments as Fixed Deposits instead of liquid/debt funds so I cannot shift nor I want to break FDs. Still I'm putting money on every fall in 5 different funds. I'm rebalancing my portfolio too as I've exited almost everything in equity barring 1/3 remained PFC shares I got in FPO allotment. Although I'm still not convinced where this market goes and cherry picking a stock is very risky. Even a share like reliance or SBI or BHEL or M&M or HDFC tanks 2% on 1 day and rises 5% other day so where market is heading is big headache so I transfered my headache to fund managers.
Funds I own and keep adding, thanks for fundsindia addtional purchase of small amounts of 500 and 1000 are,
SBI Equity solely for bluechips, SBI emerging from mid-caps, Kotak Lifestyle for a unique portfolio, UTI MNC as inflation doesn't harm this fund and finally I added Sundaram Capex yesterday as BSE CG index is at years low now. Out of these UTI MNC and SBI emerging market are above my buying price and I added only twice a sum of 1000 each in both. SBI Equity is eating a lot of money and is still down by 2.4% of buying price and I'm adding since 5600 nifty levels. Kotak lifestyle and Sundaram capex are on breakeven. And this is picture when market is at lows. If there is any sudden spike northwards, all these will give multifold returns.
I further plan to add UTI auto (also known as UTI Transportation and Logistics), Temploton India growth and sundaram rural only if mansoon is good or when RBI gives signal of no more rate hikes, SBI Comma on Greece agreement as commodity stocks are getting hit most due to Greece impact and if market tanks a percent or more sundaram energy with a very long term view. I'm taking a heavy risk thinking of going with theme based funds in later or prolly last part of fall and expecting nifty is contained at 4900 levels and above logics like RBI/Greece/mansoon happens. If things go wrong and a deep correction happens, I won't buy any of these at all!
I'll thereby advice all to reshuffle porfolio and look beyond liquid/debt/FD now and take risks. It's not right time to jump in share market and pick xyz but it's great time to be invested and keep investing in mutual funds.
Quoting Warren Buffet "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."!
Funds I own and keep adding, thanks for fundsindia addtional purchase of small amounts of 500 and 1000 are,
SBI Equity solely for bluechips, SBI emerging from mid-caps, Kotak Lifestyle for a unique portfolio, UTI MNC as inflation doesn't harm this fund and finally I added Sundaram Capex yesterday as BSE CG index is at years low now. Out of these UTI MNC and SBI emerging market are above my buying price and I added only twice a sum of 1000 each in both. SBI Equity is eating a lot of money and is still down by 2.4% of buying price and I'm adding since 5600 nifty levels. Kotak lifestyle and Sundaram capex are on breakeven. And this is picture when market is at lows. If there is any sudden spike northwards, all these will give multifold returns.
I further plan to add UTI auto (also known as UTI Transportation and Logistics), Temploton India growth and sundaram rural only if mansoon is good or when RBI gives signal of no more rate hikes, SBI Comma on Greece agreement as commodity stocks are getting hit most due to Greece impact and if market tanks a percent or more sundaram energy with a very long term view. I'm taking a heavy risk thinking of going with theme based funds in later or prolly last part of fall and expecting nifty is contained at 4900 levels and above logics like RBI/Greece/mansoon happens. If things go wrong and a deep correction happens, I won't buy any of these at all!
I'll thereby advice all to reshuffle porfolio and look beyond liquid/debt/FD now and take risks. It's not right time to jump in share market and pick xyz but it's great time to be invested and keep investing in mutual funds.
Quoting Warren Buffet "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."!
Thanks for your detailed comment.
I am bit skeptical about thematic funds. So i never go more than 5-10% in thematic funds. i prefer banking or FMCG funds which are less cyclical than realty etc.
You r saying UTI MNC is costly to buy. But raisng stocks may rise again and falling stocks may fall further. As for as NAV is concerned if it is high(despite falling market)means good,not like individual stocks where high historical PE or 52 week high makes the stock less attractive for fresh buy.
Last quote (Buffet) is very nice
I am bit skeptical about thematic funds. So i never go more than 5-10% in thematic funds. i prefer banking or FMCG funds which are less cyclical than realty etc.
You r saying UTI MNC is costly to buy. But raisng stocks may rise again and falling stocks may fall further. As for as NAV is concerned if it is high(despite falling market)means good,not like individual stocks where high historical PE or 52 week high makes the stock less attractive for fresh buy.
Last quote (Buffet) is very nice
I am buying on dips now based on the volatility. I have restructured my portfolio quite a bit and have a basket of 6 funds. My plan is simple: I have an amount say Rs. 5000 earmarked for a specific fund. Then on or before 15th I look for dips and invest one half of the amount. If not, by 15th I will invest Rs. 2500.
Same plan is followed for second half of the month. The reason for this kind of investing is to inculcate a discipline for investing and ensuring that I still invest my earmarked money into MF.
Happy Investing !!
Same plan is followed for second half of the month. The reason for this kind of investing is to inculcate a discipline for investing and ensuring that I still invest my earmarked money into MF.
Happy Investing !!
I will share my experiences which will help to understand my strategy a little better. Before this, one thing is for sure. No one can predict the movement of markets (irrespective of how many channels you watch/papers you read/websites you read). So one shouldn't aim to try and time the market.
Coming to my experience. Take one fund for example. Say HDFC Top 200. I have a total investment of Rs. 5000 p.m. as the SIP per month. This I had structured as 5 SIPs of Rs. 1000 on 1st, 7th, 14th, 21st, 28th of every month.
Being a devotee of mathematics and statistics, I started observing the movement of markets and their impact on my SIP. To my view, I started feeling that though there is a lot of volatility in the system, during my SIP days, more often than not, there was an upside movement. This means that due to the NAV being calculated on the same day, I would get lesser units. I observed this pattern a lot of times over a year and half.
Coming to additional purchase. If I need to average out my investments so that my cost value is low, then I should purchase more units at lower price. Say in a month, I purchased Rs. 5000 worth of units @ Rs. 200 per unit, I get a total of 25 units. However, if I need to get it down to say Rs. 192 (4% lower), then I should purchase 100 units at an average price of Rs. 190, which means Rs. 19000 extra investment. This is a huge sum and definitely not possible to implement over 6 funds
Your point of 10-15% is valid. However, there are couple of factors we need to think about. One being the timing part which I quoted earlier. The other being the frequency of 10-15% correction. It will not be very often and hence, you will have a very limited window as any such correction will mean that there is a knee-jerk reaction and very quickly the markets will be stabilized. Having said that this is definitely an opportunity to pump in some spare funds if one has.
I hope I am able to provide a little more clarification on my strategy.
Happy Investing !!
Coming to my experience. Take one fund for example. Say HDFC Top 200. I have a total investment of Rs. 5000 p.m. as the SIP per month. This I had structured as 5 SIPs of Rs. 1000 on 1st, 7th, 14th, 21st, 28th of every month.
Being a devotee of mathematics and statistics, I started observing the movement of markets and their impact on my SIP. To my view, I started feeling that though there is a lot of volatility in the system, during my SIP days, more often than not, there was an upside movement. This means that due to the NAV being calculated on the same day, I would get lesser units. I observed this pattern a lot of times over a year and half.
Coming to additional purchase. If I need to average out my investments so that my cost value is low, then I should purchase more units at lower price. Say in a month, I purchased Rs. 5000 worth of units @ Rs. 200 per unit, I get a total of 25 units. However, if I need to get it down to say Rs. 192 (4% lower), then I should purchase 100 units at an average price of Rs. 190, which means Rs. 19000 extra investment. This is a huge sum and definitely not possible to implement over 6 funds
Your point of 10-15% is valid. However, there are couple of factors we need to think about. One being the timing part which I quoted earlier. The other being the frequency of 10-15% correction. It will not be very often and hence, you will have a very limited window as any such correction will mean that there is a knee-jerk reaction and very quickly the markets will be stabilized. Having said that this is definitely an opportunity to pump in some spare funds if one has.
I hope I am able to provide a little more clarification on my strategy.
Happy Investing !!
I will share my experiences which will help to understand my strategy a little better. Before this, one thing is for sure. No one can predict the movement of markets (irrespective of how many channels you watch/papers you read/websites you read). So one shouldn't aim to try and time the market.
Coming to my experience. Take one fund for example. Say HDFC Top 200. I have a total investment of Rs. 5000 p.m. as the SIP per month. This I had structured as 5 SIPs of Rs. 1000 on 1st, 7th, 14th, 21st, 28th of every month.
Being a devotee of mathematics and statistics, I started observing the movement of markets and their impact on my SIP. To my view, I started feeling that though there is a lot of volatility in the system, during my SIP days, more often than not, there was an upside movement. This means that due to the NAV being calculated on the same day, I would get lesser units. I observed this pattern a lot of times over a year and half.
Coming to additional purchase. If I need to average out my investments so that my cost value is low, then I should purchase more units at lower price. Say in a month, I purchased Rs. 5000 worth of units @ Rs. 200 per unit, I get a total of 25 units. However, if I need to get it down to say Rs. 192 (4% lower), then I should purchase 100 units at an average price of Rs. 190, which means Rs. 19000 extra investment. This is a huge sum and definitely not possible to implement over 6 funds
Your point of 10-15% is valid. However, there are couple of factors we need to think about. One being the timing part which I quoted earlier. The other being the frequency of 10-15% correction. It will not be very often and hence, you will have a very limited window as any such correction will mean that there is a knee-jerk reaction and very quickly the markets will be stabilized. Having said that this is definitely an opportunity to pump in some spare funds if one has.
I hope I am able to provide a little more clarification on my strategy.
Happy Investing !!
Coming to my experience. Take one fund for example. Say HDFC Top 200. I have a total investment of Rs. 5000 p.m. as the SIP per month. This I had structured as 5 SIPs of Rs. 1000 on 1st, 7th, 14th, 21st, 28th of every month.
Being a devotee of mathematics and statistics, I started observing the movement of markets and their impact on my SIP. To my view, I started feeling that though there is a lot of volatility in the system, during my SIP days, more often than not, there was an upside movement. This means that due to the NAV being calculated on the same day, I would get lesser units. I observed this pattern a lot of times over a year and half.
Coming to additional purchase. If I need to average out my investments so that my cost value is low, then I should purchase more units at lower price. Say in a month, I purchased Rs. 5000 worth of units @ Rs. 200 per unit, I get a total of 25 units. However, if I need to get it down to say Rs. 192 (4% lower), then I should purchase 100 units at an average price of Rs. 190, which means Rs. 19000 extra investment. This is a huge sum and definitely not possible to implement over 6 funds
Your point of 10-15% is valid. However, there are couple of factors we need to think about. One being the timing part which I quoted earlier. The other being the frequency of 10-15% correction. It will not be very often and hence, you will have a very limited window as any such correction will mean that there is a knee-jerk reaction and very quickly the markets will be stabilized. Having said that this is definitely an opportunity to pump in some spare funds if one has.
I hope I am able to provide a little more clarification on my strategy.
Happy Investing !!
Yes I agree that chances of 10-15% correction is not often occurs. I buy for even 5% correction. But in the long run it doesnt make much difference... Thats why I am not bothered for 5% correction... But if u see the past datas even > 25% correction happens atleast once in 2-3 years. If we catch those corrections we will do well in our life.. Ultimate aim of doiing this is to generate 2-4% return over regular date based SIP return.... In the long run (20-30)years that extra return itself will give huge amount.
Past data.
Start Period End Period Days Sensex
Feb - 86 Mar - 88 760 -41%
Oct - 90 Jan - 91 108 -39%
Apr - 92 Apr - 93 390 -53%
Sep - 94 Jan - 96 509 -37%
Jun - 96 Dec - 96 170 -33%
Aug - 97 Oct - 98 440 -39%
Feb - 00 Sep - 01 585 -56%
Jan - 04 May - 04 129 -26%
May - 06 Jun - 06 35 -29%
Jan - 08 Mar - 09 423 -60%
From your post,
Thanks for the explanation... I have a doubt ...If market raises on those days(1,7,14) why dont we to choose one day prior to that. so that we will get more units.
Yes I agree that chances of 10-15% correction is not often occurs. I buy for even 5% correction. But in the long run it doesnt make much difference... Thats why I am not bothered for 5% correction... But if u see the past datas even > 25% correction happens atleast once in 2-3 years. If we catch those corrections we will do well in our life.. Ultimate aim of doiing this is to generate 2-4% return over regular date based SIP return.... In the long run (20-30)years that extra return itself will give huge amount.
Ok, I will answer one by one. Choosing a day for SIP is not easy. It depends on the flexibility provided by the AMC. Not all fund houses are open for SIP investment on any day of the month. Only if you choose to invest by yourself, can you try to time on specific dates, which is the strategy I am advocating.
Coming to 25% correction, it is really interesting read. However, to extrapolate my principle, I would advocate this. If one has free cash, then pump in more money as the market corrects more. Over the long run, as you have rightly pointed out, it will pay off. However, key thing to note is that you are not exactly timing the market as you should have a separate independent investment plan and you have extra spare cash to pump in.
Personally, I am not sure if I would like to save money over 2-3 year period waiting for the crash. This comes from my limited understanding on how to predict if a specific dip is a crash or just volatility. I would look forward to your viewpoint on this.
Happy Investing !!
Thanks for the explanation... I have a doubt ...If market raises on those days(1,7,14) why dont we to choose one day prior to that. so that we will get more units.
Yes I agree that chances of 10-15% correction is not often occurs. I buy for even 5% correction. But in the long run it doesnt make much difference... Thats why I am not bothered for 5% correction... But if u see the past datas even > 25% correction happens atleast once in 2-3 years. If we catch those corrections we will do well in our life.. Ultimate aim of doiing this is to generate 2-4% return over regular date based SIP return.... In the long run (20-30)years that extra return itself will give huge amount.
Ok, I will answer one by one. Choosing a day for SIP is not easy. It depends on the flexibility provided by the AMC. Not all fund houses are open for SIP investment on any day of the month. Only if you choose to invest by yourself, can you try to time on specific dates, which is the strategy I am advocating.
Coming to 25% correction, it is really interesting read. However, to extrapolate my principle, I would advocate this. If one has free cash, then pump in more money as the market corrects more. Over the long run, as you have rightly pointed out, it will pay off. However, key thing to note is that you are not exactly timing the market as you should have a separate independent investment plan and you have extra spare cash to pump in.
Personally, I am not sure if I would like to save money over 2-3 year period waiting for the crash. This comes from my limited understanding on how to predict if a specific dip is a crash or just volatility. I would look forward to your viewpoint on this.
Happy Investing !!
It's almost immposible to "buy at dips" via SIP if you don't have interactive broker which provide addtional investments on SIP in-between due dates. However one can choose index funds as our main view is not diversifying portfolio but taming and timing the falls and rises. 1 such fund is IDFC Nifty. HDFC Sensex Plus/JM Nifty can also be used though your first investment requires 5000 in later 2 while IDFC nifty requires just 500.
08/06/2011 Additional Investment 500.00 10.4810 47.705 47.705
10/06/2011 Additional Investment 500.00 10.4174 47.997 95.702
15/06/2011 Additional Investment 500.00 10.3457 48.329 144.031
20/06/2011 Additional Investment 1,000.00 9.9912 100.088 244.119
On 8th Nifty closed at 5526, 10th it was down 1% closed at 5485, 15th 5445 and 20th 5257.90 almost 250 points from initial investment. Now NAV stands at 10.42 and on investment of 2500 returns are 2545 or rs 45 profit that comes around 1.75% without any exit load.
Now I've option of taking 2500 out and keeping units worth 45 with me or redeeming full amount. The same I did with HDFC mid-cap and SBI Magnum equity. SBI Magnum equity is up by 2.52% and HDFC mid-cap by 2.67% but they'll attract exit load hence it'll be back to square one, around 1.5% returns.
One should have deep pockets to put money on every fall. What if Nifty didn't go up by 3% on friday and fell by 3%? I was to arrange almost 3000 each fund to average out the navs! As market goes down further amount to pour in increases. One can't put same amount on 1% fall to average out. Hence to catch dropping knife is dangerous and should not be attempted until one is expert and have patience, money and can track funds on regular basis. One will get good returns in short as well as long run. A catch on 1% fall or 10% fall makes no difference until market rises to our entry levels and till that time it's almost risking like equity. The risk return pay off is high here in compare to equity as your set of shares in portfolio may rise or fall but in long run it'll only rise if not today after 2 years.
08/06/2011 Additional Investment 500.00 10.4810 47.705 47.705
10/06/2011 Additional Investment 500.00 10.4174 47.997 95.702
15/06/2011 Additional Investment 500.00 10.3457 48.329 144.031
20/06/2011 Additional Investment 1,000.00 9.9912 100.088 244.119
On 8th Nifty closed at 5526, 10th it was down 1% closed at 5485, 15th 5445 and 20th 5257.90 almost 250 points from initial investment. Now NAV stands at 10.42 and on investment of 2500 returns are 2545 or rs 45 profit that comes around 1.75% without any exit load.
Now I've option of taking 2500 out and keeping units worth 45 with me or redeeming full amount. The same I did with HDFC mid-cap and SBI Magnum equity. SBI Magnum equity is up by 2.52% and HDFC mid-cap by 2.67% but they'll attract exit load hence it'll be back to square one, around 1.5% returns.
One should have deep pockets to put money on every fall. What if Nifty didn't go up by 3% on friday and fell by 3%? I was to arrange almost 3000 each fund to average out the navs! As market goes down further amount to pour in increases. One can't put same amount on 1% fall to average out. Hence to catch dropping knife is dangerous and should not be attempted until one is expert and have patience, money and can track funds on regular basis. One will get good returns in short as well as long run. A catch on 1% fall or 10% fall makes no difference until market rises to our entry levels and till that time it's almost risking like equity. The risk return pay off is high here in compare to equity as your set of shares in portfolio may rise or fall but in long run it'll only rise if not today after 2 years.
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