For Rahki Vasavada........
I have studied your last answer and suggest the following.
What if he had not sold any units in the first instance?
We know that the selling price of those units was 1.3207 each on the initial date. We also know that the value of the whole fund on this date is calculated using this selling price.
In a declining market, say 3 months later, the seliing price of each unit has reduced to 1.194. Of course, this reduces the total value of the fund.
Logically it follows that if you sold 1000 units on the first date you would make 1320, whereas if you sold 1000 units 3 months later you would only get 1194. Therefore, as one would expect, selling one’s shares or units in a declining market will loose money. The difference in the fund values on the two dates will quantify the loss.
In a bull market, with rising prices, the same action will result in a gain or profit. These are the market forces which determine values of all equity-based investments.
Surely, this is the same logic to be applied to my question and the comparative values are crucial.
In the first instance he sold units which he did not need to. On that date those units had a known value. 3 months later, all of the units in the fund were worth less than they were previously because of the bear market. Yes, he got more units for the same money but the fact is that their total value was less than it had been 3 months earlier.
It stands to reason therefore that if he had done nothing, the fund would still have lost value overall in the period due to the bear market but, because of his intervention, the fund lost more.
To me, this is logical. Can you dispute it and counter with alternative logic?