{"id":11361,"date":"2022-12-14T13:58:16","date_gmt":"2022-12-14T08:28:16","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=11361"},"modified":"2022-12-15T12:13:08","modified_gmt":"2022-12-15T06:43:08","slug":"time-in-the-market-or-timing-in-the-market-which-is-more-important","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/time-in-the-market-or-timing-in-the-market-which-is-more-important\/","title":{"rendered":"Time in the Market or Timing in the Market &#8211; Which Is More Important?"},"content":{"rendered":"\n<p>One very frequently asked question to any <a href=\"https:\/\/www.tickertape.in\/blog\/how-to-invest-in-shares\/\">stock market<\/a> financial advisor is, \u201cWhen to get into the markets?\u201d followed by other questions like \u201cMarkets are at an all-time high; should we wait for some correction?\u201d, \u201cMarkets are at an all-time low; should we not wait for a little more correction?\u201d.&nbsp;<\/p>\n\n\n\n<p>One should realise that the only time that matters is how early you start your investing journey, and the amount of time you stay in the market will define how joyful your journey will be. Highly recommend reading it till the end to get a different perspective on the same topic.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The NIFTY has delivered ~130% return from the bottom of March 2020. But even if someone had invested during December 2019, one could still make ~52% kind of return by simply spending time in the market and doing absolutely nothing. Before your mind starts to wonder about the difference between the kinds of returns, just ask yourself whether you would be able to time it in the future. I hope you\u2019re reading this further, only if your answer is \u201cdefinitely not\u201d.&nbsp;<\/p>\n\n\n\n<p>You can check out the forecast and rating feature on <a href=\"https:\/\/www.tickertape.in\/pricing?ref=homepage_product-shortcut&amp;utm_source=blog&amp;utm_medium=gart&amp;utm_campaign=arvindkothari\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape Pro<\/a>, which enhances your research skills. One should analyse markets with the same approach as how one analyses companies.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/time-in-the-market-or-timing-in-the-market-which-is-more-important\/#Analysing-earnings\" title=\"Analysing earnings\u00a0\">Analysing earnings\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/time-in-the-market-or-timing-in-the-market-which-is-more-important\/#A-longer-time-horizon-of-drawdowns\" title=\"A longer time horizon of drawdowns&nbsp;&nbsp;\">A longer time horizon of drawdowns&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/time-in-the-market-or-timing-in-the-market-which-is-more-important\/#Equity-market-is-all-about-the-highs-the-lows-and-the-glows\" title=\"Equity market is all about the highs, the lows, and the glows!&nbsp;&nbsp;\">Equity market is all about the highs, the lows, and the glows!&nbsp;&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/time-in-the-market-or-timing-in-the-market-which-is-more-important\/#A-different-perspective-on-the-topic\" title=\"A different perspective on the topic&nbsp;\">A different perspective on the topic&nbsp;<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Analysing-earnings\"><\/span><strong>Analysing earnings\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The markets were at an all-time high in January 2020, when Nifty was at 12,352 and EPS was at Rs. 431, and then entered the bear territory (i.e. falling more than 20-30%) in no time and made a low at 7,500&nbsp; in March 2020. It is regarded as the fastest fall in the history of stock markets. In July 2021, Nifty 50 was 15,700, and EPS was Rs. 560.&nbsp;<\/p>\n\n\n\n<p>The <a href=\"https:\/\/www.tickertape.in\/indices\/nifty-50-index-.NSEI?utm_source=blog&amp;utm_medium=gart&amp;utm_campaign=arvindkothari\" target=\"_blank\" rel=\"noreferrer noopener\">Nifty 50<\/a> doubled in a very short span of time from the lows. At that point, one tends to think that the market is overstretched and has risen way too much. Essentially, the market had grown by 27%, and earnings had increased by 29%, as mentioned earlier. The growth in the market was in tandem with earnings.&nbsp;<\/p>\n\n\n\n<p>Now, in December 2022, Nifty 50 is at 18,609.35, a return of 18.5% from July 2021. Hence, it\u2019s better to understand the drivers of uptrend\/downtrend in the market rather than just speculating.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A-longer-time-horizon-of-drawdowns\"><\/span><strong>A longer time horizon of drawdowns<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/yMFAxWQn5O-29C0LNZSD-wj_qgWs2TfafnKTY1877ceT8UFRJbkEDyj-N0TGjD0DXJNlR_E2ko99h7ScnUW3D4Knp672xWxeh_zyLToQd_mhw9OQx3MegrfP5hZEzzuxV3uS84GlcM7n4RVz53b8A_iJq2DS7MEhcYs4H6JXlRjtmeHlw_3fY8Fsw1H1kQ\" alt=\"\"\/><\/figure>\n\n\n\n<p><em>Source: Mint Article <\/em>&nbsp;<\/p>\n\n\n\n<p>The Nifty has experienced double-digit corrections in 18 of the past 20 yrs, with nine of these corrections being 20% or more. On the other side, the Nifty has risen from 1,000 in January 2001 to 17,000 in August 2021 throughout the same time span. Over the past 20 yrs, that\u2019s a 17x return or a&nbsp; compounded return of 15%, easily outperforming all other asset classes, especially on a post-tax basis. There are certain elements which aren\u2019t under our control. But, what one can do to make meaningful returns is to stay invested for a longer period and take advantage of the lows and highs during the investment cycle.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Equity-market-is-all-about-the-highs-the-lows-and-the-glows\"><\/span><strong>Equity market is all about the highs, the lows, and the glows!&nbsp;&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A-different-perspective-on-the-topic\"><\/span><strong>A different perspective on the topic&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A different perspective on this topic is to focus on the timing of companies and promoters making capex decisions. Was it done in the downcycle or after an already witnessed upcycle? This also determines the <a href=\"https:\/\/www.tickertape.in\/blog\/return-on-investment\/\">return on investment<\/a> and management\u2019s understanding of the industry and its working.&nbsp; Rather than timing the market, understand the industry cycles and management\u2019s journey regarding how they performed during different cycles. With prudent industry understanding, one can make tactical allocations to generate that incremental <a href=\"https:\/\/www.tickertape.in\/blog\/alpha-and-beta-in-mutual-funds\/\">alpha<\/a>. Spending time on these investment decisions would generate far superior returns than timing the overall markets.&nbsp;&nbsp;<\/p>\n\n\n\n<p>This investing approach has helped us to generate good returns over time. For instance, the <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">Equity<\/a> Small Cap <a href=\"https:\/\/www.tickertape.in\/blog\/stock-market-index\/\">index<\/a> in the last year is down by -7.2%. Niveshaay\u2019s Mid-Small Cap focused portfolio on smallcase generated +14.84% simultaneously. Research-based informed investing can generate handsome returns in the long term.&nbsp;<\/p>\n\n\n\n<p>You can create thematic <a href=\"https:\/\/www.tickertape.in\/watchlist?utm_source=blog&amp;utm_medium=gart&amp;utm_campaign=arvindkothari\" target=\"_blank\" rel=\"noreferrer noopener\">Watchlists<\/a> on Tickertape. These watchlists will help you track your judgements in the short term. This exercise will help you choose the right companies and help you track their performances over time, and understand how your chosen companies have grown over time.&nbsp;<\/p>\n\n\n\n<p>The bottom line is to research well, allocate right, and sit tight (\u201ctime in the market\u201d), resulting in earning bright.<br><\/p>\n\n\n\n<p><em>This article was written by Arvind Kothari. He has been practising Equity Research and Investment Advisory for the last 12 yrs and has previously worked with ICICI Bank as an Industry Research Analyst. He then founded <\/em><a href=\"https:\/\/niveshaay.smallcase.com\/?utm_source=blog&amp;utm_medium=gart&amp;utm_campaign=arvindkothari\" rel=\"nofollow noopener\" target=\"_blank\"><em>Niveshaay Investment Advisors<\/em><\/a><em>, a <a href=\"https:\/\/www.tickertape.in\/blog\/securities-and-exchange-board-of-india-functions-powers-and-regulations-of-sebi\/\">SEBI<\/a> Registered Investment Advisory Firm.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One very frequently asked question to any stock market financial advisor is, \u201cWhen to get into the markets?\u201d. Read our expert Arvind Kothari explain, whether time in the market or timing in the market is important. <\/p>\n","protected":false},"author":59,"featured_media":11371,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[1770],"tags":[230],"acf":[],"modified_by":null,"jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/12\/11-Dec-2022-Time-in-the-Market-or-Timing-in-the-Market-Which-Is-More-Important_-17.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/11361"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=11361"}],"version-history":[{"count":5,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/11361\/revisions"}],"predecessor-version":[{"id":11423,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/11361\/revisions\/11423"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/11371"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=11361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=11361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=11361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}