The SEC recently issued an alert about investment seminar scams. Remember: Investing is NOT easy, and is virtually never guaranteed (unless you are buying U.S. treasury bonds). Generally, investors profit from investment only by taking on risk in an intelligent, informed manner and having good luck.
Note: The standard disclaimer on financial advice applies to this post. Consult with your investment adviser before making any investment decisions.
Everyone wants to know how to time the financial markets. But new investors are usually advised not to bother with timing. It can take a lot of time and concentration to time the markets, so maybe that’s a good thing.
But then again, for an experienced investor, it’s really not that hard to thoroughly screen the markets to narrow down a selection of stocks (or other investments) that will perform well in the future. If you know what to look for, you may even find some stocks that are in the bottom of a trough, sure to rise. But to find those stocks, you very well may have to sift through a few hundred other stocks, cherry-picking the ones that look like strong buys. But often, when an investment reaches its peak, it isn’t so clear that it’s time to sell. You may be able to pick and choose the stocks you buy when entering the market, but exiting, your options are far more limited.
Many guides for new investors suggest that instead of concentrating on when to purchase stocks, investors should focus on when to exit the market. When it comes to inexperienced investors, I have to agree; a new investor should concentrate on the exit rather than the entry. You’ll have to sift through much less information that way, and over time, you’ll learn how to get an idea of which way any stock is headed in any market. But for an experienced investor, I suggest concentrating on entry. Investments newly selected by a knowledgeable and experienced investor are likely to outperform ones selected earlier. While there may be some additional gains in timing the apexes of investments you chose earlier, as an experienced investor, more likely than not, your portfolio will perform even better with investments you choose today.
So, in summary:
If you are an experienced investor, concentrate on timing your entry.
If you are an inexperienced investor, concentrate on timing your exit.