10 Investment Tips for Beginners: #9. Don’t try to time the market.
Posted on | April 21, 2009 |
Timing the market is a fool’s game. Just admit that you don’t have a crystal ball or a time machine, develop a plan and follow it. If timing the market worked, we would all buy low and sell high… but then, there wouldn’t be anyone to sell to or buy from because we would all be timing the market and we would know it was low/high and so the market would just freeze. See the fallacy of timing?
Anyway, here’s a better method: Admit you can’t time the market. You can’t possibly know all that is knowable - you’re not omnipotent. A better approach is to develop a rating scale for the stocks in your portfolio, and update them once a week. When you update them, determine what price you’d buy more and what price you’d sell. Then put your stops and limit order in place, as covered in A Simple Secret to Successful Investing.
Then you can go back to blissfully ignoring the media noise for another week.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
25 Investment rules from Jim Cramer.
Cramer’s Top 5 Picks for Stocks to Buy
Cramer’s Bottom 5 Picks for Stocks to Buy
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2 Responses to “10 Investment Tips for Beginners: #9. Don’t try to time the market.”
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December 30th, 2009 @ 10:25 pm
[...] Much 6 Pay Attention To Risk 7 Don’t Avoid Reality 8 Don’t Fall For Hot Stock Tips 9 Don’t Try To Time The Market 10 Try Before You [...]
February 12th, 2010 @ 9:54 am
I must disagree that timing does not work. Timing is very difficult and you will not always be correct. With a little common sense you can beat the markets. Simply sell some mutual funds (I don’t recommend anyone buy stocks) when the market is reaching 3 months highs and buy back a similar fund when the market is lower. If you can buy things back 5% less than you sold them you are getting a good deal. I never do this with more than 10% of my assets with the exception of Feb. 2000 where I went 100% cash. I bought it all back just before the election in 2000 which was two years too soon but I was still way ahead.