Are You Timing the Market?

When should you put your money into the market? When should you pull it out? Is there a best and worst time? Are you timing the market? If you are timing the market according to headlines, you’re doing it wrong. We’ll show you the correct way to time the market. Put simply, timing the market is trying to figure out the best times to put your money into and pull it out of the stock market.  We’ve all heard, “buy low, sell high,” but when do you know the optimal time to do that?  You don’t, and neither do the talking heads trying to convince you that they do. Being conservative doesn’t sell newspapers or television advertising.  Jim Kramer ranting like a lunatic sells those things.  But screaming lunatics are seldom right.  Do you take advice from the “dirty ass unemployed gentleman” (call back!) screaming about end times outside the subway station?  Well, if he had a TV show, he could be Jim Kramer. The stock market offers a wonderful gift of an average of 7% returns.  There will be highs and lows, but in the long term, the market goes up.  It’s the short term that the prognosticators are trying to predict and they are usually wrong. There are just too many variables, and no one can predict the future.  The prognosticators are just loud and get a lot of attention, and they make really bold predictions all the time.  Once in a while they get it right and suddenly they look like Nostradamus. The correct way to time the market is through dollar cost averaging, which we explained it Episode 99.  This just means slow dripping your investing money into the market rather than throwing it in all at once.  This is a good philosophy for new people who are nervous about investing.  But you will make more, over the long term, if you lump sum it. Market corrections happen often.  All kinds of things can effect this, domestic political events, world political events, natural disasters even.  This doesn’t affect us long-term; you shouldn’t be checking your investment accounts daily and freaking out over the fluctuations.