Investments

Asked by Anonymous

Updated 3w ago

Why do so many people tell me not to time the market?

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Junus Eu
Junus Eu,
Top Contributor

Top Contributor (May)

Level 8. Wizard
Answered 3w ago

Honest answer:

Because they don't want to take the responsibility when you lose money ;)

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Brandan Chen
Brandan Chen, Financial Planner at Manulife Singapore
Level 5. Genius
Answered on 08 May 2019

On hindsight, its easy to say when you should have entered or exited the market.

Like what Billy mentioned, high can be higher, low can be lower. Although the current market seems to be high now, you choose to wait till the the market crashes before you enter. What if this is the start of another 10 year bull run? You would have missed the boat completely.

At the end of the day, what matters is time in the market rather than the timing you enter.

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Alex Chua Cheng En
Alex Chua Cheng En, Pcme at Anderson Junior College
Level 3. Wonderkid
Answered on 08 May 2019

The answer: it is very difficult to understand Mr market, unpredictable. Adding on the what Brandan Chen and Billy Ko:

Here are some of my comprehension and insights from Benjamin Graham's margin of safety. Instead of timing the market, have a game plan of WHEN you have decided to enter and exit the market. The usefulness behind margin of safety is to reduce risk/loss from human error and/or your analysis such that you can maximise your returns. This brings into the definition of time in market' mentioned by other commenters on 'the period of time you want your stocks/index/etfs to be compounded'.

- P. S: humble advice from books' insights and experience. No prior experience from myself yet. Only analysis

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Simply because low can always go lower, high can always go higher and there's no way to know when each would happen.

When one times the market, emotional aspect comes into play. Looking at a stock down 5%, would you have the guts there and then to enter? Turning things the other way, if the stock is up by 5%, will you have the tendancy to take profits?

Hence that is the reason why many would just advice you to stay vested regardless of market conditions (through RSPs / DCA)

That being said, one can practice timing the markets only if one has the confidence in one's discipline, telling yourself when you would enter / exit the market at a specific price.

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