As a beginner in the stock market, please note that timing the market accurately on a consistent basis is nearly impossible, even for the most seasoned investors. Attempting to time the market, especially for short-term trading purposes, is associated with high risks and costs.
According to a SEBI study, 9 out of 10 individual traders in the equity Futures and Options Segment incur net losses, with an average net trading loss of around ₹50,000. And, transaction costs can significantly eat into any profits generated.
Instead of trying to time the market, adopting a long-term investment strategy can be more beneficial. One such strategy is the Roots & Wings (RAW) philosophy by JAMA Wealth. This approach involves selecting stocks based on stringent criteria related to the company’s debt levels, return ratios, promoter integrity, growth potential, cash flows, and market dominance.
In the ‘Roots’ approach, the focus is on companies with strong fundamentals – those with low debt and consistent returns. On the other hand, the ‘Wings’ approach looks for companies with strong growth prospects.
This approach takes the focus away from timing the market and instead concentrates on the quality of the investment. When it comes to investing, time in the market is more important than timing the market. Regular reviews of your investment portfolio can also help in timely exits from risky stocks.
