It's Not About the Timing
Have you ever heard something like this: "The stock market is so bad. I'll wait till it gets a little better, then I'll get back in."
Perhaps you have said this yourself.
If you have been reading our articles for a while, you'll recognize the fallacy in that comment.
One, no one has ever been able to consistently over time predict when to get in and out. There are lot of really smart people who have broad knowledge and a detailed understanding and also decades of experience - but they can't do it consistently over a long period of time.
Two, now we have computer modeling and artificial intelligence rapidly catching up and soon perhaps surpassing human intellect. Even with cups and cups of coffee, a human can't process such voluminous data so quickly. I think we have yet to see if there is a computer program or AI tool that can truly predict when to buy and sell. If it works, then everyone will have it, and the edge will go from days to hours to seconds to milliseconds and whatever comes after that. That is how the free market works.
So what do you do? What happens if you make an investment and the next day the market crashes - no one of course really truly saw it coming on that day - and you lose most of what you put in? Yes, it could happen. It may even be safe to say it will happen at some point.
The alternative - sitting it out and waiting until the perfect moment - is also not acceptable. There is no perfect moment of course. The closet you can get is to be fully invested and see the your investment value jump in one day for some arcane economic reason that you may not really understand. But you can go to bed knowing you made more in the market that day than you did by working. Those moments are indeed possible.
The only solution is to automate and accept risk. Automate the same amount each month to take the emotion out of it. And accept that you will have ups and downs, and that is part of the package. Over a very long period of time the market has always gone up. There is no guarantee it will go up forever, but if you don't try, the other guarantee is that nothing will happen.
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