For investments it is said, invest in an underlying security when the prices are low, this is true for stocks or mutual funds or even gold for that matter, but now as the markets are booming like never before and charts do suggest short term upside, should we be investing at current high valuation. Here is all the discussion about in this story:
Without doubt, investors who remained invested for quite a while would have made a good fortune and now if you want to take a bet on this skyrocketing market, here is we tell you will the approach be right or not:
And now as some of the stock market experts do suggest to book profits, betting at the current stage shall be legitimate strategy too. This is being said given this rationale which is discussed below:
Now the above is being said given the earlier stance, when those who invested in index stocks just before the dot com bubble were able to make significant gains. So when investing at peak levels, not the entire instances end up at new high.
Example for the gains realization in momentum backed investing:
Say before the crisis of Covid 19 was felt at its peak in India, investors who had the courage to buy Nifty index even at highs and remained put could until the end of the year garnered a handsome return of 17 percent. And hence what is derived here is that when market momentum is seen that attracts new investors and this is one reason driving the indices to new high.
JP Analyst do advocates that momentous investing reaps higher return
The same is advocated by JP analysts in the case of US' S&P 500 index which says, "If you invested in S&P 500 on any random day since the start of 1988 and reinvested all dividends, your one-year total return was 11.7%. Now, what do those figures look like if we only consider investments on days when the S&P 500 closed at an all-time high? They're actually better! Your average total return was 14.6%."
Factors to be noted when investing at all time highs
In case you are investing for long, it necessarily doesn't matter at all at what price you are entering.
Also, when one is wanting to figure out market correction, one may not be able to judge it and instead may continue to drive higher.
Here to make the correct profit booking decision and to reap rightful gains, taking assistance of the asset manager shall also be wise.
Also, to make the most of this momentous buying and investing strategy is to get into the security and after handsome gains just book profit. Avoid investing too much at such an instance and it is more so applicable when investing at all time highs. And here the advocates adopting or advising such a strategy also advise on shifting to debt in case of high correction.