Comment by CocaKoala
2 months ago
I remember at one point a couple years ago, I saw a thread on the Bogleheads forum where people could basically call their shot on market crashes; they would post and timestamp when they exited the market and when they re-entered, so that people could go and calculate if the timing was correct or if they lost money by missing out on market growth.
I might not have the dates correct, but I remember the general strokes of one guy who decided in like 2017 or something that the market had topped out, the crash was coming any moment now, and he sold everything and called his shot. He missed out on three years of incredible gains, and then the market absolutely _crashed_ in early 2020. He got it right, by a very small amount; he had gotten more selling his positions than he would have gotten selling in march 2020. He buys back in at what ended up being the absolute nadir of the market in like april 2020 or something. The rare success story of timing the market, you love to see it.
And then a few days later, he decides that actually, no, the market still has more to drop, and he sells again. Oh well.
> He buys back in at what ended up being the absolute nadir of the market in like april 2020 or something. The rare success story of timing the market, you love to see it.
The stock market usually goes down faster than it goes up, which makes it slightly easier (well, less difficult anyway) to time the bottoms than to time the tops.
As the saying goes: "Elevator down; escalator up."
Yes, the problem with market timing is it requires two decisions that for the marginal investor are inconsistent. That's why people who sell at a high fail to reenter at a low, and also why people who stay invested at the high remain fully invested long after prices revert to a much lower level.
This suggests the answer is... fundamental analysis, which neither camp is doing.....