| Most investors dream about having the skills and | | | | "indicators" (from the length of hemlines - really! - to |
| intuition to be able to predict the rise and fall of the | | | | highly technical and complex mathematical formulas), |
| market with a precision that would not only make | | | | all of these "indicators' have proven to be unreliable |
| them rich, but give them the ability to make a | | | | over time. |
| fortune any time they choose to make one. In plain | | | | The "indicators" make the news for the one or two |
| words, investors want to be able to time the market. | | | | times that they seem to work, but people quickly |
| But history shows us that even though a few people | | | | forget all of the other majority of times that they |
| have made huge fortunes as the result of one large | | | | don't work at all. |
| market gain (the largest one-day gain in stock | | | | Investors who have been the most successful over |
| market history - 936 points - occurred on October | | | | the long run (meaning several decades), like Warren |
| 13, 2008 ), there have been hundreds, if not | | | | Buffet with his Berkshire Fund and Pete Lynch (who |
| thousands more people who have lost their entire | | | | successful managed the Fidelity Magellan Fund for a |
| fortunes in the same manner. The stock market | | | | number of years), are advocates of taking a long |
| crash of 1929 is one famous example. The ongoing | | | | term approach to stock market investing. They |
| market declines we've been seeing since 2008 are | | | | adamantly advise against buying and selling stocks |
| more recent examples. | | | | based on theories of "timing the market". |
| But still, the idea of being able to accurately time the | | | | To the contrary, they advise people to choose stock |
| market and profit from it lives in the dreams of | | | | portfolios based on analyzing a companies |
| many investors. It seems like there should be a | | | | management talent and balance sheet. They |
| reliable way to tell when the market is at it's lowest, | | | | recommend buying undervalued stocks, based on |
| buy the right stocks, then sell them when the | | | | that research. Further, they advocate holding the |
| market is at its peak. | | | | stock as a long term strategy to outlast the highs |
| So just how possible is it to time the market? Sorry | | | | and lows inherent in the stock market. The bottom |
| to tell you that it's just not as easy as you probably | | | | line is: buy smart and sell smart, based on solid |
| hope it will be. Although some investors swear by | | | | research, not on "market timing". |
| being able to profitably use various market | | | | |