Some investors lose out on market surge in ’09

SPIKE AND A MISS

Mumbai: Some investors would remember 2009 as a year of missed opportunities. According to investment experts, many investors were swayed by the global economic turmoil and doomsday predictions from various pundits and missed a chance to pocket handsome returns from the stock market this year. 

    "It was tough task to convince some investors. They have become such pessimists and so convinced that the market would tank further," says a financial consultant, who has interacted with investors in various educational forums. "The trouble was they have become admirers of some obscure pundits, who were predicting the end of stock market. They just wouldn't listen to you, they were convinced that the sensex would touch 3,000 by the end of the year," he adds. 
    No wonder, many investors stopped their systematic investment plans or booked profit and chose to wait for a clear direction before entering the market. Poor souls, they must be regretting listening to those predictions. Imagine, the sensex was at 9,903 on January 1. It has soared to 16,601 by December 21. That means, even if these investors have put their money in an index scheme, they would have earned around 67%. If they had invested in diversified schemes, they would have earned a little more in the same period. For example, diversified equity category has given an average return of around 74% in the last one year. 
    "In the best of times, it is difficult to predict the market. The so-called experts may be able to speak about the broad direction of the market, but it is impossible to predict every minute's move in the market," says Suresh Sadgopan, chief financial planner, Ladder 7 Financial Advisories. "For example, there is a common belief that the market would peak around Diwali, but if you look at the trend in the last five years, sometimes it hasn't happened," he adds. 
    Gaurav Mashruwala, a certified financial planner, says investors should remember that "time in the market is important to get higher returns, not timing the market." 
    "The best way to maximise returns is to align your goals with the market. For example, if you have eight or nine years to reach the goal, opt for equity. If you only have a year or two, then go for debt investments,'' he says. "The market can be volatile in the short term. But looking for tips, inside information or news... you can be completely mislead," he adds. 
    The point is: you can't do anything about the short term volatility in the market. All you can do is to believe that equity has the potential to deliver superior returns in the long term. Traders can cause envy for a short period, but they wouldn't be able to repeat the act everytime. So, next time don't abandon your financial plan in the face of short-term uncertainties, stick to your plan, say experts.