Best times to enter the markets

A fascinating analysis on the rate of change in the CNX 500 index provides valuable insights for investors. The study shows that the best times to buy into the index are when the rate of change falls below zero. This trend has appeared several times over the past two decades: at the end of 2008, in 2012, during the demonetization period in 2016, at the Covid-19 bottom, and more recently around March 2023.

Timing the Market

For patient investors, these periods when the rate of change dips below zero offer prime opportunities to enter the market. These moments often come after significant market corrections or long periods of consolidation. If you can wait for these opportunities, which tend to occur every two to four years, you can potentially consider investing a substantial amount at a more favorable time.

The same strategy applies to the CNX small cap index. Significant bottoms were recorded in 2009, 2012, 2016, during the Covid-19 pandemic, and in early 2023. This approach involves waiting for the market to become oversold or to consolidate before making a move. It’s a discretionary style of investing, relying on careful timing and patience.

The Non-Discretionary Approach

On the other hand, non-discretionary investing involves staying invested in the market regardless of its fluctuations. This strategy avoids the fear of missing out (FOMO) and eliminates the need to time the market. By rotating securities using a sound strategy, investors can maintain a portfolio that keeps up with winning stocks and potentially outperforms the market over time.

Choosing the Right Style for You

Both investing styles have their merits. Discretionary investing can yield significant returns if done correctly, while non-discretionary investing provides a more stable and less stressful approach. The key is to choose the style that aligns with your confidence level and investment goals. Some investors may feel more secure with a discretionary approach, while others prefer the consistency of a non-discretionary strategy.

Check out the detailed video on the WeekendInvesting App