1. Timing the market kills the overall return of the portfolio: Raamdeo Agrawal of Motilal Oswal

Timing the market kills the overall return of the portfolio: Raamdeo Agrawal of Motilal Oswal

One of India’s top market experts Raamdeo Agrawal, MD and Co-founder of Motilal Oswal Financial Services Ltd says that it is not possible to time the market perfectly, and investors looking to do so may kill the overall return of the portfolio.

By: | Published: October 11, 2017 6:27 PM
Emkay, Emkay Emerging Stars, Emkay Emerging Stars Trust, alternative investment fund, alternative investment, investment fund, Category III alternative investment, Emerging Stars Fund, AIF You cannot have only high-return phase if you’re investing for the long-term. (Image: FE Graphic)

One of India’s top market experts Raamdeo Agrawal, MD and Co-founder of Motilal Oswal Financial Services Ltd says that it is not possible to time the market perfectly, and investors looking to do so may kill the overall return of the portfolio. In his speech at the Morningstar conference  Raamdeo Agrawal said, “If you invest for the long-term, you’ll pass through phases of very high return, very low return, a phase of no return and also negative return. All this put together, creates long-term return. People want only high return phase.They don’t want other three. You will never have long-term return like that.”

Further the expert observed that only the owners of the company create long-term return. “That’s why long-term return is built only by the owners of the company, as they live through all the four phases. In the process of avoiding bad time, investors inadvertently avoid good times also,” he said adding, “Timing the market kills the overall return of the portfolio.”

His view is shared by Ridham Desai of Morgan Stanley who says that investors, in their urge to time the market, may have missed out on the bulk of the returns offered by the markets.

Ridham Desai says that the best 100 days in the last 22 years, have produced a staggering 600% returns! “We have computed the number of trading days since 1995, We’ve had 5,500 trading days. In that period, the index is up about 900%. The best 100 days have produced 600% of this 900% return,” Ridham Desai, Managing Director, Morgan Stanley India said at the conference.

He says that investors, in their urge to time the market, may have missed out on the bulk of these returns. “So, if you missed those 100 days, in your urge to time the market, you’ve missed bulk of the returns which the markets have produced,” he said at the Morningstar conference. Bringing  home the point that the investors should remain invested rather than attempting to time the market, he said, if you had avoided the worst 100 days, your returns would have been 1,400%, which would have been near impossible to identify.

 

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