What if you were the unluckiest investor in India?

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Subscribe to enjoy similar stories. NEW DELHI : As investors, we are constantly worried about investing before a major event. It could be an election result on the horizon, central bank action on interest rates, or the Union budget.

Except uncertainty never really goes away. No one wants to be that “dumb" investor to invest right at the top, see a substantial decline, and then be told: “Of course, the market was set for a crash. Didn’t you see all the signs?" So, we wait some more.

The solution is not having the perfect foresight about what will happen because that is impossible. Instead, let's do a thought experiment involving three types of investors who invest a certain amount every year in equities. As an example, let’s see where the three investors would invest in 2008.

The regular investor would have deployed their money in the Nifty at 6,144; the unlucky investor would have deployed on 8 January with the Nifty at 6,287, and the lucky investor would have waited until 27 October to buy when the Nifty was at 2,524. Now, let’s look at the returns of the three investors at the end of the year in the sequence of lowest to highest returns: -52.9%, -51.8% and 17.2% for the unlucky, regular and lucky investors, respectively. Each of us worries about being that 2008 investor who invested in January to see that gut-wrenching decline.

In our hypothetical exercise, the unlucky investor takes that fear to its extreme by investing at the market top every year. How disastrously does this investor do? Remember, like in 2008, our three investors invested a set amount each year from 2000 to 2023. Our analysis shows in some years, the regular investor and unlucky or lucky investor symbols overlap when the market opens at the high or