‘Market Timing’ Myth – Compiled the last 2 decades data on Sensex’s High & Low values during a particular year. Assume that 2 investors invested exactly on the mentioned dates, one always at the highest point during the year & the other by a stroke of a Miracle, only at the lowest points of the year; for the last 20 years.
The results –
Investor investing only on the Highest Value day ? of every year – CAGR of 10.74%.
Investor investing only at the Lowest Value day ? of every year – CAGR of 14.46%
I’ve not assumed any dividends getting reinvested. Even if considered, the differential CAGR would not differ significantly.
Should ‘timing’ matter for long term investors? Even the worst timer for 20 years has been better off – post tax, post expenses ? on the Index. And I’ve not even come to pick on some top quartile funds.