Market Timing Vs Time In The Market ?




There was an article about the important 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 ….



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.






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 market as a much longer cycles using “regression line “.(click)


Avoid buying during the peak of valuation and at the same time buying more during 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 crisis to hit and react accordingly…




Cheers !!




Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” by Warren Buffet in Oct 2008 during GFC







Comments

  1. 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
    Replies
    1. Hi Uncle CW8888,
      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,,, :-)
      Cheers !!

      Delete

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