If you are a mutual fund investor, it doesn`t pay to be a Nostradamus on Dalal Street. A backtesting study by ET shows that regular investing yields better results than timing the market. A mutual fund investor who continued his SIPs irrespective of market movements would have made more money than one who successfully avoided the 10 biggest falls in the Sensex in the past five years.

The Sensex was trading 3 per cent higher than its pre-Brexit levels. "In a falling market, there is tendency to wait for a further fall. At the same time, in a rising market, there is a tendency to wait for a correction. In both events, investors who wait tend to miss out," says A Balasubramanian, CEO of Birla Sun Life Mutual Fund.

If there is some cold comfort for the market timer, it is the short term capital losses he has booked in the past five years. These losses can be adjusted against other taxable long-term and short-term capital gains. Even if the tax benefits are included in the calculation, the market timer still loses out to the regular investor. Experts are not surprised by the study. They say the results only reinforce the oft-repeated belief that "time in the market is more important than timing the market".

"The market is bound to be volatile but tends to outperform over the longer term. Constant tweaking of the investment does not always deliver the best outcome,".

Others believe that trying to time the market is chasing a chimera. "It is a game most investors will lose. Leave alone an average investor, even the so called experts cannot predict which way the market will move,".

If the SIP investor put in an extra SIP on the day the markets fell, he would have made more money. But investing more on a day when the Sensex is down 500-600 points requires a heart of steel that`s not usually found in small investors. Most rush to exit when markets crash.

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