Buy before it goes up, sell before it goes down - in simplistic terms, that is what timing the market is about, and most of us would want to do this whether investing in bonds, stocks or mutual funds. Investors who know their stock market chops have one or two options - they can incisively time the market, go with a solid investment, or improve his/her rate of return by combining the two options. But to make the long story short, you may want to be careful, because if you want to increase your rate of return by timing the market, this could be a gamble. You will be best advised to always be on the lookout when timing the market, to expect the unexpected, because making an unlucky investment at the wrong time can cost you a smashing return or cost you money at the end of the day.
Timing the market is difficult. To be successful, you have to make two investment decisions correctly: one to sell and one to buy. If you get either wrong in the short term you are out of luck. Be very careful when employing this strategy.
Bonus fact - stock markets tend to go up more often than they go down.
But even then, a declining stock market can become a gadarene decline in no time. Therefore your short-term loss may outweigh a similar short-term gain in terms of impact.
The bulk of the gains posted by the stock market are posted in a very short time. In short, if you miss one or two good days in the stock market you will forgo the bulk of the gains.
Not all investors know how to time their strategies. So it would be mandatory for you as an investor to acknowledge, at the very least, the importance of marketing timing, yet be cognizant enough to see the forest for the trees - there are other strategies that may inevitably more successful and less risky for you.
One of the reasons why it is so difficult to time correctly is due to the difficulty of removing emotion from your investment decision. This is the worst mistake you can make as emotion can cause you to invest when prices are high and sell when the prices are low. Professional money managers, who can remove emotion from their investment decisions, can add value by timing their investments correctly, but the bulk of their excess rates of return are still generated through security selection and other investment strategies. You would want to go with a good Tactical Asset Allocation in order to increase your rate of return through market timing. These funds are a tight ship in themselves - they are governed by financial canons that would allow them to alter the mix of investments, rather than allowing investors to fall prey to the insidious lure of emotional market timing.
Timing the market is difficult. To be successful, you have to make two investment decisions correctly: one to sell and one to buy. If you get either wrong in the short term you are out of luck. Be very careful when employing this strategy.
Bonus fact - stock markets tend to go up more often than they go down.
But even then, a declining stock market can become a gadarene decline in no time. Therefore your short-term loss may outweigh a similar short-term gain in terms of impact.
The bulk of the gains posted by the stock market are posted in a very short time. In short, if you miss one or two good days in the stock market you will forgo the bulk of the gains.
Not all investors know how to time their strategies. So it would be mandatory for you as an investor to acknowledge, at the very least, the importance of marketing timing, yet be cognizant enough to see the forest for the trees - there are other strategies that may inevitably more successful and less risky for you.
One of the reasons why it is so difficult to time correctly is due to the difficulty of removing emotion from your investment decision. This is the worst mistake you can make as emotion can cause you to invest when prices are high and sell when the prices are low. Professional money managers, who can remove emotion from their investment decisions, can add value by timing their investments correctly, but the bulk of their excess rates of return are still generated through security selection and other investment strategies. You would want to go with a good Tactical Asset Allocation in order to increase your rate of return through market timing. These funds are a tight ship in themselves - they are governed by financial canons that would allow them to alter the mix of investments, rather than allowing investors to fall prey to the insidious lure of emotional market timing.
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