I am very fiscally conservative and risk-averse. The bad days are actually one of the few things that incentivize me to invest more than a couple hundred here or there. So timing the market works in the sense that it makes me add to my portfolio.
I managed to time the market in the last crash by pure luck. I was planning to use 33% of my stock portfolio in order to buy gold. I sold off prior to the crises but when the market dropped 30% I just went back into the market with the money. I know however that I was just lucky and there is pretty much no solid proof that one actually can time the market successfully.
Felix, that's pretty awesome! Obviously, you're right that there little proof that anyone can successfully time the market over the long haul but it's still nice that you managed to luck into it this time around :)
market drops are more of a "push" to buy maybe more or be motivated knowing you're getting more shares of the quality asset/stock, rather than thinking of actually timing it. Just accumulate quality assets for the long term.
it took me a realy long time to have a mindset that falling stocks is just like Steam Sale Period (combined with reasonable financial analysis of course). plus now i always make sure the money i invest in stock is money that i really dont care about instead of trying hard to be a prodigal Warren Buffet Incarnate
This was such a great explanation. I took an investments class from a former VP of Derivatives trading from Merrill Lynch on Wall Street and she always said “don’t time the market”. However, she never explained it like this!
Nicole, that video already exists. It's called the Million Dollar Decision :) Thanks for the comment! Link to video - th-cam.com/video/MtLh_oo5RVM/w-d-xo.html
Agreed 🙌🙌I think you can choose your initial entry point carefully for your investment but once you're in its all about time in the market and not taking it out! No one knows what will happen in the short term unfortunately, I wish I had a crystal ball to tell me when to invest 😔 Great video though, left a like :) always love your practical examples
Certainly! Obviously someone sitting on some cash could've invested when the market fell earlier this year. There can certainly be drawbacks to that strategy if its something you're using long-term as we've covered previously but it is still an option. But beyond that initial entry point it becomes more about time in the market like you said. Thanks for the comment :)
I think psychology works against us. People have a bias towards more frequent experiences and towards recent experience compared to things that happened further back in the past and less frequently. So when you trade and see your portfolio going up, you tend to forget that the market is not symmetrical -- it doesn't go up the same way it can go down. Market goes up a little, more frequently. And goes down a lot, less frequently. We do not have the opposite of large market crashes. And a single market crash can undo decades of compounding interest.
Do you have different calculators and websites you use for your math examples and sources? I'd love to be able to figure some of this out myself. Teach a man to fish...
Like... You calculated what would have happened if you skipped the best trading days... But I doubt you did calculus or manually algebraed out each day.
Justin, I don't use any websites or online calculators for most of these calculations. I just use Excel. At the moment I don't have the spreadsheets available anywhere but I have been considering polishing some of them up and adding them to something like a Patreon as a way for those who wanted to experiment with their own numbers or hypotheticals while supporting the channel. It would take a bit of time though as some of them are fairly complex and over the four years I've been doing these videos I've built quite a few spreadsheets. But that's how I do it :)
@@NextLevelLife Good to hear! I've learned that algebra before, but mostly haven't needed it in a hot minute so that would be WAY more convenient than manual calculation.
To what extent do traders time the market? Trend followers for instance try for the middle chunk of a decent size trend. They know they can't be there in the beginning because trends take a while to form, and they realize false reports/indicators/chart patterns/ will take them out early before it ends. Hence their goal is to ride the middle of that wave. They do pretty good compared to faster turn swing and tay traders who looks for reversals. Thats what is usually meant by timing the market is these fast pace traders who look for over bought and over sold stocks and take a guess. The thing is just because you may see something over bought/sold it only matters if a bunch of traders also decide the same thing and take serious action. So in my opinion that if the crux of the problem with depending on any form of movement. You can find a great setup but it ALL depends upon many others agreeing with you and roughly at the same time and all taking action for that price to move.
1) does it works regardless invest strategy ? (eg : invest a little bit every month vs investing a lot at a time?) 2) If you invested lot of money in 99/2000 or 2007, 2008 (right before the crash) how much time would it take to at least get back your financial investment ?
1) I think that he has another video where he illustrates this. Buy & hold is effective whether investing a lot at a time or a little every month. A little every month was more effective than holding back until the timing was "right" with a larger sum because of the returns that was missed by not investigating as the money became available. 2) I think in the same video he illustrates it would take years to get your initial investment back, which is another reason it's good to invest some every month instead of all at once. That way it reduces your risk.
Investing a certain sum of money every month /fortnight/weekly is the way to go. If market is going down, your money is buying more units as the stock or index fund is becoming cheaper.
Another good video! I am assuming dividends were not factored in? To add to the gains of NOT timing market, when you are NOT invested you do not benefit from any individual stock or index fund dividend distributions. That can average a few % a year--which is HUGE compounded over a life time.
A lot of people need to hear this. I DCA in every week. Someone famous said buy your stocks like you buy groceries.
A good way to think about it!
what if you only buy your groceries on discounts?
@@hudsanity_1590 haha thats what the all investors are basically trying to do
Timely time to be seeing this again 😃. Closest I come to trying to time the market is to find ways to buy more when it is dropping, like now!
I am very fiscally conservative and risk-averse. The bad days are actually one of the few things that incentivize me to invest more than a couple hundred here or there. So timing the market works in the sense that it makes me add to my portfolio.
I managed to time the market in the last crash by pure luck. I was planning to use 33% of my stock portfolio in order to buy gold. I sold off prior to the crises but when the market dropped 30% I just went back into the market with the money. I know however that I was just lucky and there is pretty much no solid proof that one actually can time the market successfully.
Felix, that's pretty awesome! Obviously, you're right that there little proof that anyone can successfully time the market over the long haul but it's still nice that you managed to luck into it this time around :)
No one can time it exactly, but yes, you must “time the market” as best you can. You certainly better not mistime it or you are wiped out.
market drops are more of a "push" to buy maybe more or be motivated knowing you're getting more shares of the quality asset/stock, rather than thinking of actually timing it. Just accumulate quality assets for the long term.
it took me a realy long time to have a mindset that falling stocks is just like Steam Sale Period (combined with reasonable financial analysis of course). plus now i always make sure the money i invest in stock is money that i really dont care about instead of trying hard to be a prodigal Warren Buffet Incarnate
This was such a great explanation. I took an investments class from a former VP of Derivatives trading from Merrill Lynch on Wall Street and she always said “don’t time the market”. However, she never explained it like this!
Thanks, Tony! I'm glad you got something out of the video :)
There is a difference between timing the market and buying with a margin of safety.
Market is pure gambling no one is waiting 40 years, working and business has a better and safer return a year. Wallstreet makes no sense
Daniel, can you do a video explaining how fees and expense ratios affect your outcomes?
Nicole, that video already exists. It's called the Million Dollar Decision :) Thanks for the comment!
Link to video - th-cam.com/video/MtLh_oo5RVM/w-d-xo.html
Agreed 🙌🙌I think you can choose your initial entry point carefully for your investment but once you're in its all about time in the market and not taking it out! No one knows what will happen in the short term unfortunately, I wish I had a crystal ball to tell me when to invest 😔
Great video though, left a like :) always love your practical examples
Yeah I would like a video on initial entry point. Especially given how volatile things have been.
Certainly! Obviously someone sitting on some cash could've invested when the market fell earlier this year. There can certainly be drawbacks to that strategy if its something you're using long-term as we've covered previously but it is still an option. But beyond that initial entry point it becomes more about time in the market like you said. Thanks for the comment :)
@@NextLevelLife you're welcome
i can’t seem to find an answer to this, is it better to invest say £10/day everyday or say on monday invest £70 and not invest the rest of the week?
Invest every day, so that the money is already invested and has a bit more time to grow
Go use the time to time the market to do productive work and increase income for more dough to invest. Beats timing it like a full timer would.
What about rebalance.
I think psychology works against us. People have a bias towards more frequent experiences and towards recent experience compared to things that happened further back in the past and less frequently.
So when you trade and see your portfolio going up, you tend to forget that the market is not symmetrical -- it doesn't go up the same way it can go down. Market goes up a little, more frequently. And goes down a lot, less frequently. We do not have the opposite of large market crashes. And a single market crash can undo decades of compounding interest.
Do you have different calculators and websites you use for your math examples and sources? I'd love to be able to figure some of this out myself. Teach a man to fish...
Like... You calculated what would have happened if you skipped the best trading days... But I doubt you did calculus or manually algebraed out each day.
Justin, I don't use any websites or online calculators for most of these calculations. I just use Excel. At the moment I don't have the spreadsheets available anywhere but I have been considering polishing some of them up and adding them to something like a Patreon as a way for those who wanted to experiment with their own numbers or hypotheticals while supporting the channel. It would take a bit of time though as some of them are fairly complex and over the four years I've been doing these videos I've built quite a few spreadsheets. But that's how I do it :)
@@NextLevelLife Good to hear! I've learned that algebra before, but mostly haven't needed it in a hot minute so that would be WAY more convenient than manual calculation.
Excellent message! 🤑
Thanks, Gino!
To what extent do traders time the market? Trend followers for instance try for the middle chunk of a decent size trend. They know they can't be there in the beginning because trends take a while to form, and they realize false reports/indicators/chart patterns/ will take them out early before it ends. Hence their goal is to ride the middle of that wave. They do pretty good compared to faster turn swing and tay traders who looks for reversals. Thats what is usually meant by timing the market is these fast pace traders who look for over bought and over sold stocks and take a guess. The thing is just because you may see something over bought/sold it only matters if a bunch of traders also decide the same thing and take serious action. So in my opinion that if the crux of the problem with depending on any form of movement. You can find a great setup but it ALL depends upon many others agreeing with you and roughly at the same time and all taking action for that price to move.
So true! Trying to time the market is the worst thing we can do... Its better to be consisted investor!
Completely agree 👌👌
Well said!
I too DCA weekly.
watching this made me lump sum my money yesterday
1) does it works regardless invest strategy ? (eg : invest a little bit every month vs investing a lot at a time?)
2) If you invested lot of money in 99/2000 or 2007, 2008 (right before the crash) how much time would it take to at least get back your financial investment ?
1) I think that he has another video where he illustrates this. Buy & hold is effective whether investing a lot at a time or a little every month. A little every month was more effective than holding back until the timing was "right" with a larger sum because of the returns that was missed by not investigating as the money became available.
2) I think in the same video he illustrates it would take years to get your initial investment back, which is another reason it's good to invest some every month instead of all at once. That way it reduces your risk.
@Kris Na you are probably talking about that video : th-cam.com/video/lTSXBrp7wC0/w-d-xo.html
Investing a certain sum of money every month /fortnight/weekly is the way to go. If market is going down, your money is buying more units as the stock or index fund is becoming cheaper.
@@ravinarayan5273 but we r losing on the initial investment
@@ravinarayan5273 should not we do portfolio rebalancing during such times
that depends on HOW you do it ...
Another good video! I am assuming dividends were not factored in? To add to the gains of NOT timing market, when you are NOT invested you do not benefit from any individual stock or index fund dividend distributions. That can average a few % a year--which is HUGE compounded over a life time.
Ha I’ve gotten burned this year almost turned into charcoal tried to time the market with options 🤦🏽♂️🤦🏽♂️
Intereating video
I often find myself inter eating, so this video was very helpful