Timing has an uncanny way of throwing your investing into chaos. Trying to time your investing often leaves you timed out. Events always play the culprit that spoils every market timer’s party. Events turn things around swiftly giving little time for a response. The flurry of reforms flooding our minds will turn most fence-sitters into avid buyers of equity. It only needs to last a few weeks with no signs of reversals and rollbacks. Inevitably, we try to time our buying and lie in wait for too long. When it is almost beyond the right time, we get convinced fully that this time it is different. The time spent in wait inevitably sees valuations rise like the high tide. The past months have seen the markets make higher tops and higher bottoms. This trending up of the markets will leave behind those waiting for a previous bottom to be reached. Inevitably, those left behind will make a strong push to catch up. This desperation will only push valuations higher. Buffett’s famous quote says it is only when the tide goes down that we will know who has been swimming naked. It is equally true that it is only when the tide rises do most investors want to swim.
In a fickle and indecisive market, decisive investors always win.
Look at the paradox. The government loses its Majority. The very next day, it simply moves on in a business-like fashion to speed up the reforms’ momentum. One wonders why the PM did not do this in 2009. No party would have had the guts to pull the plug post-elections in 2009. Yet, the country was held ransom to wrong economic policies for eight long years. We have accumulated lakhs of crores of government debt which our children must pay when they grow up. There are a few simple compelling questions which those opposing reforms must answer. If we want to have endless freebies, who will pay for them? Does the celebration of poverty really make for good politics? Why should our children pay for our economic excesses? For eight years, we demonized reforms in the name of fighting foreign interests. Ironically, this effectively helped a foreigner’s remote controlling of our nation’s finances. These regressive methods beggared the mindset of the poor, killed aspirations by dis-incentivising work and idled the nation economically. Effectively, we fostered the worst crony capitalist regime in our history. The foreign hand we need to fight is a different one.
To profit from the next rally, learn not to wait for the previous bottom.