Timing Isn’t Everything. And Neither is Market Timing

They say timing is everything. And the same goes for market timing. But is it?

My wife and I got a Golden Retriever puppy on Saturday. We also have a 5-year-old boy who’s starting kindergarten in two weeks, and a 3-year-old girl who never stops talking or moving. Oh, and my wife, a high school counselor, starts back at work this week after having the summer off, while I will be away for four days, attending our annual Cabot Wealth Summit conference. All of this got me thinking about timing.

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On the surface, throwing an eight-week-old puppy into the busiest month of the year for my family may seem like a hasty decision. It sure felt like it when the puppy started yelping to go out to pee at 1:30 in the morning last night … and when my daughter entered our room at 4 in the morning for her nightly visit … and again when the puppy was up for good at 5:30.

And it will reeaallly feel like it to my wife the rest of this week as she shuttles kids and puppy to and fro by herself while dealing with the usual stresses that come with working at a high school as a new school year begins.

Perhaps our timing could have been better.

Similarly, there have been better times to buy stocks than the current one. As I write, the S&P 500 is down roughly 4% in the last three weeks, and volatility is at its highest point since December 2018, as measured by the CBOE Volatility Index (VIX).

But market timing is an imperfect science. This could be little more than a trade war-fueled pullback, like we saw in May. If that’s the case, this could be a good time to buy some great growth stocks while they’re trading at a discount.

It’s too early to say that the worst is over—not with stocks falling again on Monday and the VIX remaining above 19. A sustained, convincing uptrend – i.e. one that lasts longer than just two or three trading sessions – is the only thing that will tell us for sure if the market clouds have parted.

Does Market Timing Matter? Depends on Your Timeline

If you’re a trader or someone looking to earn big profits in a short amount of time, market timing is important, and now probably isn’t the time to buy. However, if you’re a long-term investor who is unperturbed by the ebbs and flows of the market, perhaps now is a good time to buy stocks. This mini-market correction – if that’s all it is – was just the retreat you were looking for to create an ideal entry point. “Buy on dips,” we always advise.

Besides, if the long term is your investment timeline, you probably won’t care much if this is more than just a pullback. If volatility continues and stocks are knocked back for another month or two, you’re OK with it. You’re betting that prices will be higher a year from now, five years from now, and 10 years from now. They usually are.

If that’s the case, then market timing may not matter to you. You might be fine buying stocks regardless of what’s going on in the market.

And that’s how I’m rationalizing the timing of our puppy purchase.

Sure, this first week may be hell. Sure, we could have waited another week. Sure, my wife may need an IV and an impromptu 48-hour spa getaway the second I get back from the Cabot conference.

But a year from now, we probably won’t remember how physically, mentally and emotionally exhausting this week was. We’ll just be happy we have a dog.

And until then, this face will reassure me that timing is overrated.

Forget market timing. Just look at this face!

Chris Preston

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Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.

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