“The key to get in the market, as it is not about timing the market, but time in the market that matters” – Ann Wilson.
The main questions is have your ever thought of market timing or you already did it? Well, in this post I will be explaining about how can market timing make you from average to below average. If you ever came here to clear you mind once and for all about market timing, then you are in the right place. Read on, my friends.
What is market timing?
Market timing is a process where active investors who think they can predict the future market directions.These kinds of people are called market timers. In other words, market timers is a person who tends to make decision to buy or sell investment based on the economic or other factor that might affect the markets such as news. But since news is unpredictable and random by nature, it is impossible to predict the markets. Unless they can see the future or a fortune teller which I am pretty sure they are not.
What did they really do?
In an attempt to market timing, they invested in stock when the market is going up then shelter the investment when it goes down. As simple as that. But, as i was saying before, when the market is unpredictable then how are you going to do that? It is a waste of your time and money by timing the market. If predicting what the stock market can be done, then everyone would be rich.
Can market timers win in a long run?
Absolutely no. Market timing is not for investing for a 20 to 30 straight years. To be able to buy and sell your investment through timing the market for a straight 20 years as well as trying to win consistently. That’s sound so exhausting. Not to forget, the market timers need to get a hand on the world news as fast as possible and make a prediction based on the news. Which is an impossible thing to do. No one can predict correctly for straight 20 years. Not even in 10 years.
Why are they still trying to time the market.
This is because the urge to beat the market is so strong and too emotional. All of this happens because of the Financial Medias that armed with their powerful marketing strategy. They are the primary villains. They tends to create marketing on a lot of successful stories of market timing gurus which earn a lot. And then, the newbie investor would come and said “maybe i can do it too”. After that, they end the marketing ads with “believe in yourself”, “you can do it” or something like that. What a great marketing strategy and what a joke. But, since you are a Smart Investor, you would never do that. Because a Smart Investor would avoid the financial media or watch it only for entertainment purposes. Nothing more than that.
Studies that proves market timing does not work.
There were abundance of studies and research that confirming market timing is a bad investment strategy. More importantly, all the researches share the same conclusion which is market timing does not works. For example, you can proceed your readings at 3 reason why market timing doesn’t work. The author will provide you 3 great reason why you should avoids market timing.
Solutions to avoid timing the market.
Bottom line is the right time to be investing is when the investor has enough money. And the right time to get out is when the investor need to cash out the money. The longer the time on investing, the better it is because of the compound interest. Buy and hold using the index funds and play it for the long run is the key to successful investing. Not buy low and sell high in a short term.
Market timers are almost the same as market tradings. They tends to earn lots of profits from the upswing of the markets and trying to avoid the downside. They main goals is to generate profits with no risk which is impossible thing to do in the investment worlds. If you live long enough, you would know that everything is risky even life itself.