What would have happened if you would have brought these stocks daily?Follow @sukeesh Follow @sukeeshbabu
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I tried to see how much Profit/Loss one would have made if he/she brought a unit of stock daily in the following Instruments.
I picked the following randomly from the NIFTY50 Index.
Burton Malkiel famously wrote in A Random Walk Down Wall Street that
A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.
For each day, there is a low price and a high price. I have chosen the average value of these two as the buy price on that day.
It’s impossible for anyone to predict the bottom of the chart in the stock market. So, anyone who has chosen the lowest price traded on that day is very lucky and anyone who has chosen the highest price traded on that day is very unlucky.
In the following charts, “Cum cost” represents the cumulative cost of all the units you brought so far and “Cum value” represents the current value of all the units you brought so far.
You would have made a profit of INR 5700!!.
You would have made a profit of around INR 10000!!
You would have made a LOSS of around INR 5300!!
You would have made a profit of around INR 26000!!
You would have made a LOSS of around INR 3100!!
This is how exactly an SIP works!
You buy right and sit tight. Always accumulate slowly (not daily )!