The advisors all advise against it, but everyone all want to do it. Many people all believe that they should time the market. The big stock market crash in 2008 further cemented many investor’s conviction that it was absolutely necessary to time the market. With that in mind, I just wrote a long article about the many pitfalls on market timing for the GM column in the upcoming FSM magazine.
Fear and greed often make us time the market wrongly, so it has to be a very savvy investor who can keep his emotions in check, or one who has taken enough hard knocks from his own investing through the years who will not be swayed. History has not been kind to long term investors in the last 2 years as they would have held their investment to the top of the market in 2008, and then seen several years of gains possibly wiped out within that one year. So, I think it’s futile to dissuade anyone from market timing. Besides, there are many investors who have successfully timed the market and done well too. Also, Fundsupermart will be announcing big price changes soon that may make people want to time the market even more because it is cheap to do so.
Just be aware though that there is always many emotional pitfalls in market timing that will often push you to do the opposite of what you should be doing, which is to buy low and sell high. Also, the shorter the investment time horizon, the more likely market sentiment may drive the market in a different direction as what fundamentals point towards. So, if you do want to market time, please do it with both eyes wide open!
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