Market Timing

Is "Buy Low, Sell High" Market Timing?

“What’s the difference between ‘buy low, sell high’ and ‘timing the market’?”

That was a question posed by a friend recently. He said that he had been advised to “take some wins off the table and invest in under-appreciated assets”. He went on to say, “which sounds like trying to time the market.”

He may be getting good advice, but he is right to be skeptical. 

Another Groundhog Day, Another Market High?

Last year was an amazing time to be invested in stocks. The S&P 500 Index recorded 62 new closing highs in a year that only had one down month (April). 2018 has felt a little like Groundhog Day, well not THE Groundhog Day (today), but more like the 1993 Bill Murray movie. In the film, Murray's character awoke each morning to relive the same day. So far, the S&P 500 has recreated setting a new record high 15 times before peaking last Friday. 

With market records seemingly being set every day, I’m increasingly asked if the winning streak means negative returns for stocks are on the horizon? Maybe so, but if you had gone to cash every time the market hit a new high last year, you would have left a lot of meat on the bone.

When addressing this question, it can be helpful to keep the following in mind:

Thinking About Market Timing? Forget It!

Sometimes, lessons on investing come from the most unexpected places. Maybe you saw the news this week that rap artist 50 Cent came into a “Bit” of a windfall. According to a Wednesday article by TMZ, one of the payment methods the artist accepted for his 2014 album, Animal Ambition,was Bitcoin. At the time, one of the crypto coins was worth between $650 - $700, and the rapper took in about 700 of them in sales.

Fast forward to today, with each Bitcoin worth $10,000, er, $12,000, uh, $11,000…oh, you get the point, and his stash is now worth somewhere around $8,000,000. Thus, leading to what is sure to become one of the most famous investing quotes of all time, “Ima keep it real, I forgot I did that $#!+, lol.”