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Business News/ Markets / Can you really time the market? 3 experts weigh their views
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Can you really time the market? 3 experts weigh their views

Can you time the market? Rather, can you tame the market? It is nothing short of a misgiving for investors who think that they can time market movements while planning their next purchases or sales.

Predicting market moves is nothing short of folly (Pixabay)Premium
Predicting market moves is nothing short of folly (Pixabay)

A bearish phase follows a bullish phase and you will see how new-age investors resort to social media platforms to learn about the market. A few finfluencers gladly oblige them by hinting at possible market movements based on an assessment of technical charts.

Some stock market investors also inquire about the best time when they must invest in the market. Holding enough cash in hand and waiting to buy in dips is a favourite age-old strategy of investors looking to buy low and sell high.

However, in all the chaos that surrounds market movements and discussions surrounding them, the question arises, “Is it really possible to time the market?".

It is not possible to predict when the next market crash would be. Experienced investors associate a secular bull run with Fed and RBI’s decisions on repo rates while also assuming that all this information may already have been factored into, thus, explaining the mere “zig-zag" movement.

Many investors attribute the success of some of the world’s top investors like Warren Buffett or Benjamin Graham or Carl Icahn suggesting that they may have been adept at timing the market. Myths surrounding the ability of certain individuals being able to correctly predict the ups and downs in the markets are as old as our folklore and common as bedtime stories.

While some may be able to say which market sector(s) may do well in the short and long run, depending on news and the frenzy surrounding certain stocks, the truth is that no one has ever been able to consistently foresee market movements with high precision.

There is a thin line of difference between luck and skill, especially, for people who jump into the market without learning the nuances of investing. So, subtle is the difference that the chances of being able to predict market movements are proportional to the number of times one predicts. Followers forget bad calls and hail good calls stemming from skill, expertise, and knowledge.

With too many people now posing as “Market Pundits", the Securities and Exchange Board of India (SEBI) is currently developing guidelines for financial influencers, who provide stock investment advice through social media platforms such as Twitter, YouTube, Instagram, and Facebook.

Who predicts the markets?

Practically, no one predicts the markets nor anyone can. However, business channels do set the tone for the market movement by analyzing which way the market would go. They discuss various sectors, the buy and sell in each sector, foreign investors versus domestic investors’ participation, institutional investors’ market strategies, and more to decipher if the market would be bullish or bearish.

However, uninformed investors and traders looking for some quick market just want to about the bull versus bear runs and their approximate timings. This explains the rise of “finfluencers" whose views contain more chaff than grain.

Basavaraj Tonagatti, a certified financial planner and SEBI-registered investment advisor said,““A good investor is one who has all these qualities

  • Curiosity to learn and update
  • Skepticism to doubt and question independent views rather than relying on or blind following
  • Humility to accept faults and learn from them
  • Discipline to stick and invest for decades, and
  • Courage to stick to what is planned than taking knee-jerk reactions during the crashes."

Viral Bhatt, Founder, Money Mantra said, “Good investors are not defined by the amount of money they have to invest or the secret stocks they know to pick. They are defined by their ability to make sound investment decisions and stick to their plan over the long term.

I would define a good investor as someone who

  • Has a long-term investment horizon
  • Understands the risks and potential rewards of investing
  • Diversifies their portfolio to reduce risk
  • Reinvests their earnings to compound their returns
  • Is disciplined and patient.
  • Is willing to learn and adapt."

Not all are long-term investors. Some just trade in the market with a daily view of stocks’ purchases and sales. Investors often seek certainty in their decision-making process. When there is a sense of assurance, making decisions becomes easier. Successful traders demonstrate decisiveness and take action, indicating that they possess a certain level of conviction regarding future outcomes.

Can one accurately predict where the markets are headed? The answer is “No". Accurately predicting the direction of markets is an arduous task due to the numerous complex factors at play.

Rishabh Parakh, Chief Play Officer, NRP Capitals explained, “Only God can predict where the markets are headed. For us, no one can say where the marker will hear- south or north. It depends on a variety of factors such as fundamentals, earnings, economy, global macro micro factors, and so on. The other side is all about investors’ behavior and sentiments driving the market so all theory goes to the drain when sentiments work otherwise. Rather, what should we predict is our goals and risk appetite, and future cash flows. If long term, I will simply answer this by saying look at the last 42 years of stock market returns. From where and what state it has come to today’s stage and answer yourself about the future and predict how much growth it is waiting for us to unlock so"

Economic indicators, geopolitical events, investor sentiment, and unexpected situations all influence the financial markets. These variables create difficulties in accurately forecasting market movements with a high level of precision. Although some individuals may occasionally make successful predictions, it is generally improbable to consistently and accurately forecast long-term market trends.

Do not define yourself as a “bull" or as a “bear" if you want to earn from the market. Also, hoping that the market would perennially be in a bullish or bearish phase is nothing short of folly. Regard yourself as an “opportunist" as you train your eyes to look for the next multi-bagger stock(s) that will earn you a fortune in the coming decade. Irrespective of whether the market is experiencing an upward or downward trend, the objective is to be well-prepared to seize the next opportunity that arises.

The degree of success in the market is not solely reliant on having a bullish or bearish stance. What truly determines one’s destiny is the ability to navigate effectively through the inevitable ups and downs that occur. Adaptability and readiness to capitalize on opportunities will play a crucial role in overall success.

 

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This is the relationship between economy and financial markets 
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This is the relationship between economy and financial markets 

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Published: 19 Jun 2023, 08:22 AM IST
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