Analysis of the MidCap Index over three different Time Intervals. Similar to how on Google Earth we zoom in to a place of interest; Let’s do the same here.
- 20 Years – Monthly Candles | Long Term Investor
- 4 Years – Weekly Candles | Medium Term Investor
- 1 Year – Daily Candles | Swing Investor
20 Year View – Monthly Candles | Long Term Investor
Below is a hypothetical case study of 4 different Long term Investors, named: Green, Blue, Red & Orange.
- Green CAGR: 18.8%: depicts a Long Term Investor who has been invested on MidCap Index for 20 Years, and incidentally his return is highest at 18.8% CAGR. Time is his Friend and he had started Investing quite early in his Life!
- Red CAGR: 8.7%: depicts an Investor who Entered around Dec, 2007 (peak of bubble), but unfortunately for him things didn’t do well soon after, but he stayed invested and Exit 10 years later by Dec, 2017.
- Orange CAGR: 10.7%: is an Investor who got in at the value zone after the 2008 meltdown, around Apr 2009, but he couldn’t time his Exit. He panicked during the Corona Virus crash and got out right at the bottom of it.
- Blue CAGR: 18.1%: is an Investor who could understand market cycles and could time his Entry & Exit optimally.
Key takeway:
- Timing the Market is important for CAGR.
- Bad Entry can’t be saved by a Good Exit, same applies the other way too.
- Staying Invested is one of the better strategies for decent CAGR.
@InvestIn10, we don’t believe in timing the market. The idea is to stay Invested, but only in those stocks which keep Outperforming the Market (Benchmark Index).
4 Year view – Weekly Candles | Medium Term Investor
The Corona Virus bottom distorts our understanding of returns. For a moment if we ignore the same, MidCap Index has given a return of 50% from Dec 2017 till recent highs.
Key takeaways
- Recent highs of 33243 has to be taken out soon for resumption of Bull Market
- Relative Strength sloping trend-line resistance (bottom half of above figure) has be broken out, else we might get into a similar scenario like Dec 2017 – Jan 2020.
1 Year View – Swing Investor
For a Swing Investor we are at one of the best Risk/Reward point.
Key Takeaways
- Good consolidation on price chart. Fib retracement of 38.2% hasn’t been violated.
- Minor breakout in Relative Strength chart, needs more confirmation.
- Levels of 29935 can be used as Stop Loss for Long positions initiated now.
- Recent high of 32939 will provide resistance which can be used as exit for Short Term Investors.
@InvestIn10, we are always in Outperforming mode, so we would stay invested and enjoy all cycles in the market.
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