Hi, my insomnia brain wanted to test what if we buy only when the market crashes/dips. So I did some backtesting on the Nifty50 Index for the last 25 years.
I compared two strategies - 1) SIP vs 2) Buy only if the price is less than 20% of market all-time-high.
Which strategy do you think won in this backtesting?
.
.
Turns out - both return around the same amount.
https://preview.redd.it/g2sxeewleno...bp&s=0f0d394f4e252f489629350d2871ae29605c0181
By the end of this testing period, the SIP strategy returned an amount of ₹13L, and Buy the Dip strategy returned ₹13.5L.
The takeaway is - that buying the dips is a solid investing strategy. To the point, it goes toe-to-toe with SIP. That's what this backtesting reveals.
Disclaimer: Just because it worked in the past doesn't mean it works in the future as well. I still think SIP >>>>
If you want to play around with numbers, here is the Google Sheet I used. You can copy and use it.
Also, if you want to read more about the assumptions and methodology I used, here is the detailed post.
Let me know what you think.
I compared two strategies - 1) SIP vs 2) Buy only if the price is less than 20% of market all-time-high.
Which strategy do you think won in this backtesting?
.
.
Turns out - both return around the same amount.
https://preview.redd.it/g2sxeewleno...bp&s=0f0d394f4e252f489629350d2871ae29605c0181
By the end of this testing period, the SIP strategy returned an amount of ₹13L, and Buy the Dip strategy returned ₹13.5L.
The takeaway is - that buying the dips is a solid investing strategy. To the point, it goes toe-to-toe with SIP. That's what this backtesting reveals.
Disclaimer: Just because it worked in the past doesn't mean it works in the future as well. I still think SIP >>>>
If you want to play around with numbers, here is the Google Sheet I used. You can copy and use it.
Also, if you want to read more about the assumptions and methodology I used, here is the detailed post.
Let me know what you think.