Time in the market beats timing the market

[skovc]

Hey there!

I’m pretty sure that people have been here a while, they’ll read this and think is the same thing again.

I’m 25 y.o, European, and with a job that allows me to save around 1700 every month. That money has been sitting in a savings account for a while not knowing what to do because I’ve thought that an imminent recession was going to hit the economy for… 2 years now. I am not so sure about the phrase “time in the market beats timing the market”, because I believe that buying close to the peak would delay any gains for years, while waiting for a drop would accelerate them…

I have no plans of buying a house at the moment as I don’t want to settle somewhere right now, so I’d be happy investing that money. I’ve read good things about VWCE but I’d like to hear your opinions about my situation

 

[gift2424]

@skovc

This basically covers your concerns exactly

 

[godfavorservant]

@gift2424 Here is an even more relevant episode of their podcast. I timestamped the beginning of the "buy the dip" discussion.

 

[nishan]

@gift2424 He's so on point

 

[oliviabrown]

@skovc Hi! Strong believer in “time in the market beats timing the market” here, and it has served me well.

Some 20 years ago I questioned the way I approached the whole concept of investing. I noticed that I brough a lot of my own bias, fear and greed to the table, and that it was consistently preventing me from exceeding or even hitting the index in my investments.

What I did was to sell everything, and define a set of principles for companies to buy, and never ever sell. Those were amongst other things a strong brand, products that I see every day and see people like and even attracted to, companies that had been around for a long time, companies that had a consistent track record of dividends, and companies that had proven that they could reinvent themself as the market changed. I spent quite some time on that, and arrived at a list, and bought.

I have not looked back since, and I am super happy about my decision. The market is down? I don't care, I sleep well. The market is up? I don't care, I sleep well.

Naturally, past performance is no guarantee of future results, but for me this was one of the best things I have ever done. It took the whole stress out of the process, and made me so much more calm about it to the point where I do not even think about it.

Two of those companies that were on my list back then were Apple and Microsoft. Luck? Maybe. Happy? Yes.

So I would advocate strongly for not feeding your broker fees constantly, for not hitting the "sell" button whenever there are fluctuations, for not missing the right time to get back in the market, and for skipping sleepless night.

Buy. Never sell. Because Time in the market beats timing the market. But sure, then you need to buy companies that you can hold for decades, and preferably do so with money you can spare for decades.

 

[beenice2018]

@oliviabrown Can you also share the other stocks you picked 20 years ago?

 

[oliviabrown]

@beenice2018 Well the principles I would have used today would be the same.

What stocks that were chosen based on that same principles might be different today.

But some that did meet the principles back then for me and still do would be MMM, JNJ, GOOG, WMT, PG to name a few.

My point was not the stocks, my point was the strategy.

 

[edmundlloydfletcher]

@beenice2018 NVDA, TSLA & AAPL only

 

[dutchtears]

@oliviabrown So the TLDR version is that you picked stocks, sold them soon after, reinvented yourself and your investment approach, and picked stocks again, but never sold?

 

[garyoak]

@dutchtears He's still holding NOKIA and XEROX. Because 'buy, and never ever sell.'

 

[oliviabrown]

@garyoak I could have, yes. Happy I did not and do not though.

 

[newlifeeternally]

@skovc

I believe that buying close to the peak would delay any gains for years, while waiting for a drop would accelerate them…

The assumption is that because it's at a peak, it will go back down. Or it won't rise as much. But why do you think that this is the case?

The other assumption is that if the value is historically low, it will go back up. Or at least it won't drop too much. But why do you think that this is the case?

The reasoning doesn't make sense because it's entirely based on hindsight. You only know what the peaks/lows are in the past. It doesn't tell you anything about what's going to happen in the future.

For example, look at any company that has been steadily rising over the last decades (e.g. Apple). One perspective is: they're creating new peaks all the time. When they hit their next peak has absolutely nothing to do with their last peak. It only has to do with how well the company is running.

This is the key in investing. You're not trying to read and interpret graphs to predict their future shapes. You're trying to predict how well the business(es) will do based on how they run the business.

 

[dukedesu]

@skovc Just wait for the stock market crash, buy the exact bottom and then get mad gains. I believe in you.

 

[godfavorservant]

@dukedesu Isn't it better to buy a single stock with the best performance over the next few decades though? Maybe add a margin too.

 

[cindyfernandez]

@dukedesu Ser, where is the exact bottom? ^^

 

[j0nni3]

@cindyfernandez The lowest part of the graph? Easy peasy

 

[cindyfernandez]

@j0nni3 Ah yes, that makes sense, thank you!

And at what time is that going to be?

 

[anthony28]

@cindyfernandez If you ask this you are kinda not understanding stocks ... His comments were sarcastic because nobody knows the answer to your question.

 

[cindyfernandez]

@anthony28 And mine weren't sarcastic?

 

[shane260]

@cindyfernandez Just before the next uptick