The article is an empirical study on two of the most discussed long-term investment strategies, namely the "Contrarian Strategy" and the "High Dividend Yield Strategy".
Everyone
is trying to outperform the market. Is it practicable? Well,
in a way, Yes! All one needs to do is to follow these steps-first
take an efficient risk to get maximum returns; second, avoid
tax; and last, follow a systematic approach to investing.
Some months back the market had a bull run; most retail
investors were expecting a correction so that they could
invest the idle cash they were holding, but the bull rose
from 6,000 to 12,500 levels without any respite. "Something
that goes up has to come down" and so did the Sensex;
it came rolling down, but hardly any investor was ready
to invest his/her "Idle Cash". This is a dilemma
every investor has to face.
Another
mistake which most of us make is that, by the time we find
that a particular stock or a particular fund was the number
one performer last year; it is virtually guaranteed it will
not be number one again, but we jump on it anyway. One must
also keep in mind that bull markets are created on pessimism,
grow on skepticism, mature on optimism, and finally die
on euphoria.
Who
doesn't want to time the market and do the good stock selection?
But the fact is, there is no proven basis for hyped-investment
beliefs, including the one that value can be added to an
investor's portfolio through individual stock selection
and market timing. Many of our most esteemed investments
are based on a collection of false assumptions. Most of
us need some handholding with our investment decisions.
Often, we are busy investing and do not have the time or
expertise to research on it. One can start investing on
his own, but will reach a point where a financial
will be the best guide for achieving the next level. |
