In may i analysed roughly that the market was offering an investor roughly 10:1 odds based on discounting of the risks ( some real risks and some imaginary ).
So a 10:1 odds meant a 10 % downside and 90 % upside which was kind of a good risk : reward scenario. A investor ‘COULD’ make good money if he/she invested at that time. The key work is ‘COULD’ . Finally investing is a probabilistic exercise and one can never be sure.
That is why i get uncomfortable when some ‘experts’ predict market level. Well if they are so confident then they should put all their money in the market at the time of the forecast, make the money and retire. The truth is no one can be sure. One can only look at the odds and invest when the odds favor. Which means higher the odds , lower the chances of losing. But still that does not mean one will not lose. even a 10:1 odds means one can lose 10% of the time.
so how has the thesis worked out . with market at 5950 , it is a gain of 20 % since then. Obviously the odds are poorer now and hence chance to lose higher (unless one is ready to invest with a longer holding period )
in the end it is all about odds . Also when you look at investing this way , you invest against the crowd which is difficult but in the end more profitable
So a 10:1 odds meant a 10 % downside and 90 % upside which was kind of a good risk : reward scenario. A investor ‘COULD’ make good money if he/she invested at that time. The key work is ‘COULD’ . Finally investing is a probabilistic exercise and one can never be sure.
That is why i get uncomfortable when some ‘experts’ predict market level. Well if they are so confident then they should put all their money in the market at the time of the forecast, make the money and retire. The truth is no one can be sure. One can only look at the odds and invest when the odds favor. Which means higher the odds , lower the chances of losing. But still that does not mean one will not lose. even a 10:1 odds means one can lose 10% of the time.
so how has the thesis worked out . with market at 5950 , it is a gain of 20 % since then. Obviously the odds are poorer now and hence chance to lose higher (unless one is ready to invest with a longer holding period )
in the end it is all about odds . Also when you look at investing this way , you invest against the crowd which is difficult but in the end more profitable