February 11, 2015

Why is timing the market such a terrible idea? What is the best alternative based on past performance of investors?

4 thoughts on “February 11, 2015”

  1. Brennan Haag says:

    Timing the market is a really bad idea because it is impossible to know what the market will do. By the time you hear any news, the market has already been affected by that news. You will almost certainly loose money if you try to pock individual stocks. An alternative to timing the market is owning no load mutual index funds. You can own thousands of stocks at one so you will be muck more likely to make money.

  2. Katherine Graham says:

    Timing the market is a bad idea because you will lose more then you win. It is not possible to know what stocks are going to do. And if you do win some, you will have to keep trying to win to grow your money, and you will eventually lose.

    Your best option is to diversify your stocks without trying to cherry pick the ones you think will rise. You can do this at vanguard with a no load index mutual fund.

  3. Garrett Haag says:

    The reason timing the market is hard and not really possible is because unknown information is what moves the market. You have no way of knowing insider information legally. There are many people who track the market much closer and use computers to buy and sell on the microsecond that they want. You have no way of beating the computers by yourself. The best thing you can do is not really look at the prices of the stocks when you buy and just buy a set dollar amount on even time periods. If you want to max out your Roth in a year make payments in to that every month that will meet the $5,500 by the time you are done. You can set up auto investments at Vanguard and put some money in to your stocks whenever you want at a repeating rate. You can put $100 a month in lasting forever. You just want to dollar cost average your stocks so that you get a good average price for them, you will buy at the highs and lows but they will even out in the long run.

  4. Mike Finley says:

    Nice job everyone. Let’s recap.

    (1) Research tells us that the average investor does a terrible job in trying to time the market.

    (2) You have to be right twice. Right when you get out and right when you get in. That just doesn’t happen very often.

    (3) The wise investor does not play this game. They own the markets, stay invested, and reap the rewards over long periods of time. Onward!

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