Market timing is the investment strategy of attempting to buy stocks or funds at a low and selling them at a high. Timing buys and sells always seems so obvious in hindsight, but keep in mind that if any investor knew just when to buy or sell, they would acquire a large proportion of all the money in the world, and nobody ever does that.
Many investors start out with an exaggerated idea of the value and importance of market timing. Most eventually become disillusioned with it, after they figure out that it’s costing them money. Market timing can pay off sporadically, of course.
Although the results are largely random, successes and failures are apt to run in spurts. Good timing-based decisions often produce modest profits. However, they tend to be smaller than the losses you get from bad timing decisions.
The best market timing strategy is to buy steadily and carefully throughout your working years, and sell gradually in retirement. That approach is virtually certain to enhance your investing profits. For one thing, it stops you from selling all your stocks near a market bottom, which market timers do from time to time.
The worst market timing strategy you can adopt is to yield to hunches or jump to conclusions.
When it comes to stock trading advice, we pay close attention to market timing risk. That’s because you can never get away from unpredictable market risk, and it can cost you money to try.
Instead, use our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
When a hedge-fund manager goes into a performance slump, media and investor reactions often leave me with an odd feeling. They make me wonder, “Why does this surprise you?”
The media and the investors they quote seem to treat a hedge fund manager’s slump as a.. Read More
The most successful investors take a broad view of the market and don’t put too much faith in the use of any single indicator. This includes stock market technical analysis.
Small successes can precede big mistakes with stock market technical analysis
The main problem with technical analysis… Read More
Both new and established investors interested in building a sound stock portfolio need to avoid picking too many speculative stocks and instead focus on high-quality investments. At the same time they should spread their holdings out over most if not all of the five sectors
Many… Read More
Investors interested in building the best ETF portfolio need to look at traditional ETFs focused on top-quality stocks
Investors use ETFs in a variety of ways. To build the best ETF portfolio, you should know both the advantages they offer, and some potential drawbacks.
Diversification is one… Read More
A: We think that mutual funds are okay to hold if you own them, but we have moved away from recommending mutual funds in favour of exchange-traded funds (ETFs). They charge much lower fees. We feel that most fund investors should shift into ETFs wherever… Read More
Dear Inner Circle Member,
Many people begin an investing career with a single purchase—one stock, say, or a mutual fund. They may harbor a mistaken or exaggerated idea of the gains this investment will bring. They’ll follow up with more investments, and results will vary widely… Read More
Dear Inner Circle member,
If you want to succeed as an investor, it pays to understand these three key investing concepts, and recognize how they work together.
Compound interest. Most investors get the power and appeal of compound interest—you leave your money invested, and you earn interest-on-interest… Read More
What will make me the most money—trading vs investing? That’s a question many investors ask. The answers may surprise you.
Long-term wealth-building strategies aren’t built by aiming for outsized returns. They are built over time, and most importantly, by learning how not to repeat the market… Read More
A top ETF will practice “passive” management, and have a much lower MER than a comparable mutual fund.
You might say we specialize in “plain vanilla” stocks—the ordinary kind, in other words, without any special features. We always almost stay out of new issues. For the most… Read More
Many investors ask: Does market timing work? We believe that market timing is a poor strategy to follow.
The practice of market timing consists of coming up with and acting on a series of guesses (or estimates, or assessments of the probabilities). You would use these… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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