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What is the chance that you would have identified these 10 months correctly?
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| The best option for non-professional investors is thus to stay invested at all times
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| If you sold all your shares early this year, fed up with the range-bound movement of the markets for months on end, you have our sympathies.
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| You have just missed the opportunity of a lifetime to make big bucks from a bull run. You are the victim of bad market timing.
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| The good news: You are in august company. Worldwide, even the world's most gifted investors cannot time their market entries and exits correctly all the time. No one can call the peaks and troughs exactly.
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| Over the last 10 years, individual stocks like Infosys have done spectacularly well, but not the market as a whole. Take a look at the Sensex.
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| In 1994, the Sensex peaked close to 4500. Nine years later, it is still below that level despite the pyrotechnics of the last few months. Just four months back, the Sensex was at 3000 levels.
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| So if you had invested in 1994, you would have actually ended with losses on your plate after nearly a decade of staying invested. That is assuming you didn't cash out during the tech boom in 1999-2000.
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| Broadly, this means more people would have lost money on the markets than otherwise. So how do you make sure that you are not among the losers?
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| Easy. Assuming you've bought fundamentally sound stocks, or invested substantially in index stocks, don't get out - ever - without making a profit. The vast majority lose money on the markets because they lose patience.
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| It is in the nature of markets to remain range-bound or falling for long periods of time; but when they make up their minds, they hit peaks in no time at all.
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| The market spent months and years hovering around the 3000-mark; but it took just a few weeks this year to head past 4000.
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| If you have been holding stocks for 10 years, and you got out in March 2003, you are a loser twice over: you lost money by not getting out in 1999-00, and you have missed the boat once again in the current bull run.
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| The converse is also true: You may spend a year or two racking up slow, but steady, index gains. But one 9/11 can destroy the whole gains in just a few days.
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| The lesson for traditional losers is simple: Since you cannot time the market, the only way to make money is by staying in it for as long as it takes.
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| Investors who got in at the peak in 1994, but didn't get out in 2000, will only now be breaking even on their investments. Their gains will come only in the coming months and years.
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The Smart Investor did a study covering the period from 1979 to now comparing your returns if you had stayed invested in the market at all times - bull, bear and neutral periods - and if you had woven in and out of markets in good periods. This is what we found:
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If you are an excellent market timer - that is you stayed for the bull periods and opted out of the worst times - you could have made returns of more than 50 per cent a year.
If you are a lousy timer, you could have lost your shirt - losing around 17 per cent annually. Your money would have been safer under your pillow.
If you didn't time the market at all, and stayed invested all through the years - through good times and bad
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