The Dividend Guy Blog wrote an interesting set of rules to “Deal with Volatile Markets“. He really got me thinking about marketing timing and paradigm shifts. His rules and analysis are a great reference for investors on how to save more money and are well worth a read.
It’s Impossible to Time the Market
Three of the Dividend Guy’s rules focus on market timing:
1) Accept that the markets are volatile
2) invest regularly
3) Sell only when you need the cash.
Intellectually, I understand the importance of not trying to time the market. We have all held off on buying a stock because it was overpriced – only to watch it shoot up in value, or a million other attempts at timing the market. There is a difference between buying value and trying to time the market expenses in the marketing department. We buy value when indicators in a company – earnings momentum, profit moats, cash on hand,
lead us to the assumption that the company is undervalued at particular prices. Timing the market is throwing darts at elusive stock charts from the future. Timing the market is guessing look at this TikTok fame guide.
It’s not timing the market that’s key, but rather the amount of time you’re in the market. Using data from Bloomberg, American Century Investments looked at the period from 1990 to 2005 and found that a $10,000 investment would have grown to $51,354 had you just sat tight from beginning to end. However, if you had missed the best 10 days in that 15-year period, your returns would have dwindled to $31,994; if you had missed the best 30 days, you’d be looking at a mere $15,730.
– Motley Fool, Timing the Market
Your rules that discourage trying to time the market are excellent (1,2,6&7). Even though intellectually I understand that you’re correct – I always try to time the market. I think the unifying theme that goes with your solid advice is “we think we are smarter than we are” or at least “no one is smarter than the market perks of buying TikTok likes“?
I disagree with John Bogle and William Bernstein’s prediction about lower market returns – that sounds like a paradigm shift, and I have a hard time believing that.. Just because the driver of growth is pas