What is market timing? In short, it is a strategy that lets you get in the market when indications show that it will lift/move up, and will let you pull your money out prior to a large downturn like the 2008 financial crisis for example.
There is a widely spread, and sadly publicly approved, claim that investors, especially retail investors, can’t time the market. So your best choice to use this great wealth machine is to be in it for the VERY long term. This is totally wrong and the origin of such a claim came from large hedge funds/Institutional investors/Fund managers to force the retail investor to keep his money fully invested in such funds for the long term. The myth that is being imposed is that they know better than you. i.e let them make your decisions for you. Surprise! This is totally WRONG and can’t be any more inaccurate.
Timing the market doesn’t mean picking the bottom and getting out of the top. Simply, it means getting in the market at the right time, and out when the correct indications show that the market is going down. There is absolutely no need to sit and watch your hard-earned money lose 50%, 70%, 90%, or even more, and hope for it to come back. Hope ain’t a strategy!
There are tons of ways retail investors can use to time the market so that they gain the best when the conditions are healthy, and stay on the sidelines when they are not. Remember: you will never catch the bottom, nor the top. But you can benefit from what is in between.
Read about Stain Weinstein’s stage analysis, William O’Neil CANSLIM Investing, and many more of those that proved that an individual investor can definitely beat the market and hedge funds.
I will discuss the above points more in detail in my upcoming short articles.
Remember, if you ever want to get involved in the markets, besides the correct education, your job is to MANAGE RISK and HAVE DISCIPLINE. The stock market is not a get-rich-quick scheme, it is the world’s best compounding machine. However, it takes time, effort, and will.