Market Timing: Should You Attempt It?

Fear and greed are very powerful human emotions. Market timing pundits rely on human greed "to make more" or the fear of "losing what is yours" to get you to follow them. I believe the majority are very honest people and believe in themselves, but that does not contradict the simple fact that none have been successful to date when compared to the proper benchmark (or index).

Remember, they are using fear and greed to sell you a product.

What about buying individual stocks?

Many question me on my buying individual stocks with the hope of out performing the market and they say this is no different than market timing. I don't agree. I am not timing the market. Instead, I am trying to buy companies that I think will grow faster then the overall market due to having a promising business model run by exceptional people in markets that are growing faster than the overall economy. This is no different than opening your own business that you hope flourishes. I am just buying an established business rather than starting from scratch! I still look at questions like growth, competition, valuation, etc. but it is not dependent on the overall market except for comparing prices on a relative basis.

This is work, just like a job. I must follow the companies I own and make sure they are still doing a good job. If they don't meet my expectations, I need to sell them and move on. This can involve taxes so I have to be careful in that regard also. For most, owning index funds is far easier as it allows you to have fun in retirement rather than watching many companies. Some, like me, think it is great sport to try to beat the index funds so we do it. I would quit in a flash if I didn't continue to beat the markets, but I live with the knowledge that many good men have failed to do so in the long haul so I could under perform in the end. Still, I am not market timing.

What the Experts Say

The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it