Market Timing Vs Time In The Market ?
There was an article about the importance of “Market Timing vs Time in The Market “ by Mr Goh Eng Yeow, Senior Correspondent, The Straits Times on 20th Aug and you may find the detail as below :
This is a never-ending argument or debate on which is more important ie Timing or Time In the Market, and from most of the articles you read, you may find that most of them are more inclined towards “Time in the Market “ rather than Timing the Market.
Articles as below ….
Buy-And-Hold Investing Vs. Market Timing ( From Investopedia )
Time in the Market vs. Timing the Market ( From Monetips.com)
Why Market Timing Never Works ( From Time.com)
What the numbers show us that "time in the market" trumps "timing the market" year in and year out and rather than picking a stock for a short period of time hoping for a pop and quick return.
Well, no doubt that “time in the market” is very important as we could see the impact of “ compounding effect “ in our portfolio in the long run, ie. The world number 8 wonder according to Albert Einstein.
|image credit to theinvestmentmania.com|
But for me, I would reckon that BOTH ( Time and Timing the Market ) are equally important and do believe that if we could buy at the “right timing “ ( Here, I am not saying the perfect timing and also not about doing market timing on daily/weeks /months or even 1 or 2 years basis), but by looking at the market as a much longer cycle using “regression line “.(click)
Avoid buying during the peak of valuation and at the same time buying more during the crisis would give us “extraordinary reward “ hence shorten our time frame to achieve F.I.R.E.
As famously coined by Father of Value Investing: Benjamin Graham, Mr Market tend to be very emotional and over-react from time to time. We may take these as “opportunities “ to time the market by accumulating more share ( fundamentally strong and value stocks ) during the CRISIS.
I will not repeat what I have written before in “My Investment Strategies “ as below :
My Investment Strategy : 3 Ts 3 Ms ( part 1 ) (click )
Depending on your investment life cycle and stage (and of course your risk tolerance profile ), you may try "time the market" and be more aggressive in adjusting your " Cash: Equity " ratio base on long term market valuation.
Always be ready for a crisis to hit and react accordingly…
Quote Of The Day :
Time the market and then spent time in market relaxing and collecting doses of panadol to ease heartache. When we look back; time flies and then no more heartache anymore. Life in the market is fine again and wondering how we did it right. Timing market or time in the market?ReplyDelete
Hi Uncle CW8888,Delete
Yah,,,you are right , in the long run,,,time in market or timing the market became blur,,,when we stayed longer in the market,,, the panadol must be strong enough to heal the panic during crisis,,, :-)