Oct 26, 2013

Cory Diary : Price of Staying Away from the Market


In Stock Investment, I often encounter situations in which should I wait for the Bear before I invest or should i stay invested. I need to put it to a test at least.

With recent correction of Reits in July, I like to simulate two situations which can tell me something. I can do similar with Preference Shares or any others.




RESULT

In scenario 1, over 7 years period, the stock enjoyed 30% capital gains before sliding to red -5% loss.

In scenario 2, investment starts on 3rd year and assuming no capital gain or losses.

For a 7% initial yield returns, assuming absolute dividend amount maintains irregardless of stock price, annualized returns for Scenario 1 is higher by 1.8%.

INFLATION is a SIN to One's Financial Well Being.What can be the other ?
Probably PROCRASTINATION. So what can be even worst than that ? Maybe staying out totally or coming in very late in a big way !


Cory
26th Oct 2013

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Per Wiki,

Procrastination is the practice of carrying out less urgent tasks in preference to more urgent ones, or doing more pleasurable things in place of less pleasurable ones, and thus putting off impending tasks to a later time.

2 comments:

  1. uh.. Maybe a consistent yield might not be an accurate way to simulate.
    In a bull market, if you can get the investment at 7% yield, you can be sure you will be getting >7% (most probably 10% min.) for the same investment.

    ReplyDelete
  2. Exactly. The intent of the post is to highlight The Price of Not being in the Market.

    ReplyDelete