January 8, 2016

Investing and a Road Trip

Lets assume that you are on a trip to reach a place which is 100 kms away. Now, lets assume that you need to make to that place in 10 hours. Would you ride 100 kms per hour regardless of road conditions or would you slow down on bad roads and make up the time by speeding on good roads (lets assume a 50:50 split between them).
Distributors of Mutual Funds want you to keep investing in good times and bad the same amount of money regardless of where the markets are (in terms of how expensive or cheap they are), they are suggesting that you ride along the road even though common sense will indicate that it makes a lot of sense to slow down on bad roads (to make the journey a better one) while making it up in good roads (when markets are cheap).

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