Market Timing
A test. Did you predict the price of crude oil would plunge below $50 U.S. or that the Canadian dollar would make you reconsider your next travel destination? Don’t beat yourself up-the “experts” didn’t get it right either.
In the business of securities the more you know the more trouble you can find yourself in when you become too sure of yourself. Discipline always trumps smarts as there are just too many moving parts in this global economy for anyone to predict accurately all the time.
There used to be dozens of subscription-only, market timing journals out there but no longer. Economists? Famous for telling you why something happened after the fact. Mutual fund managers? There are some good ones indeed. However, in a bear market they spend the majority of their time trying to slow redemptions which can unravel otherwise sound long-term plans.
How about those radio commercials claiming you can get rich in all markets if you only knew what they teach. They only fill up at the end of a bull market when your chances of getting burned are highest. A little like the guy with the money getting together with the guy with the experience. Pretty soon the guy with the experience had the money and the guy with the money had the experience.
Getting your advice or insight from the nightly news? Sorry, they are in the entertainment business not education business. They are also competing with numerous other stations and are largely controlled by big media. Lights, camera, action.
There are times when I’m pretty sure of a direction of the market and I suppose my gut is right more often than not. Still, it’s not foolproof and enough to stay humble.
No one knows for sure. That’s why one has to hedge their bets. If you are not prepared in case the market goes up, down, sideways or that your personal circumstances change considerably you are likely not prepared.
Maybe the big one will hit. And then again, maybe it won’t for another 300 years. Not much we can do about that. But having a plan in place in advance is always a good idea.
Preparing for markets in all situations is something you can do something about today. For others, they maybe just need a little more money sense on creating better personal, financial habits. And, you needn’t have a crystal ball for either.