Can You Time The Market?
Every day on TV we hear yet another idiot telling us that you can't time the market. What a line of Wall Street BS. Of course they have to tell you that. If they told you that you should only put your money in the market from November to May, what would they do in June/July August? How would fund managers justify their existence? They couldn't. But this is just one in a long string of baloney stories that Wall Street will sell you if you listen. Can you get it wrong? Absolutely. But chances are if you put money in at the right times and trends, you can and will outperform the fundies. A long while back we posted some interesting numbers concerning just making two trades a year. If you started with about 10 grand and did nothing but buy the market in November and sell in may, your take would amount to something like 70 grand. If you took the same ten grand and bought in June and sold in November, your 10 grand would be worth 11 grand. (this over the last 20 years, total) Why don't you hear that on TV? Why doesn't Wall Street tell you these things? Because Wall Street needs your money flow all year. That is why you will often hear about the "summer rally" but a look at history shows there really isn't much of a summer rally. Sure, the market may wiggle higher now and then, but a real rally? not likely. So, what is our point? The other morning we were listening to a talking head on TV. His suggestion was that since we never know what is going to happen we should simply buy stocks now and hold on to them for 5 years or so. Really. The fact is this very same talking head was on this very same TV show last year saying the same thing. His picks from that time are down about 36%. But his theory is that this is nothing to worry about, just hang in there and you will be rewarded. It's been this kind of misguided information that lost US stock holders over 5 trillion dollars in two years. Buy and hold does not work in a bear market folks, it simply crushes you.The only way to make the market pay for you is to pay attention to the trends and try and snatch a piece from the middle of a move. Hang on and you will get hurt. Over the years we have played so many trends perfectly that we lost count. Then there were times that we blew it and had to pull back out and lick our wounds. But the point is that with careful planning, you should be right more than you are wrong and that means you will outperform the talking heads.
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