I remember driving once to a casino for an event. There was a walkway to the casino from the parking lot, and back to the parking lot.
The facial expressions of those walking to the casino were different than those of the folks leaving and heading to their car and back to work the next day.
Everyone walking to the casino was confident he would beat the house. It's just our nature.
We think we are smarter than the rest.
Maybe it's true, but investing is about statistics and also about emotions.
And we know there are cases when market timing can work. Some bad news comes out, either about the market as a whole or about one of the investments we own - and we buy on the dip. When it works, it's great. And there is a time to try it.
But overall, statistics show that it's not possible to beat the system regularly. Why? Software can buy on the dip also, and it does it faster than you or I can.
Most of you reading this are working at a job, as am I. We have very little time during the day to study the market. Any short-term dip is probably gone by the time we get home, eat dinner, do the dishes, read bedtime stories, take out the dog, and collapse onto the sofa with a few minutes before falling asleep.
However, the appeal persists.
So what can we do? The best solution is to set up automatic investments. If you pull $100 a month from your savings account into an investment fund, then you can buy more shares when the price is low. Over years and even decades, you'll accumulate more this way.
The problem with getting out of the market is knowing when to get back in.
The emotional burden of making that decision is not worth it.
This lesson took me years to learn.
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