AlanHarmon.net

A lot of people ask if they should 'time the market', because we read headlines and they give us good advice right? Here is what conventional wisdom says:

Do Not Try To Time The Market!

When you go through historical data, timing the market does not work about 90% of the time. There are many reasons for this, but what makes this most difficult, is that the market over time continues to go up, so if you are sitting with your money out of the stock market, it might just go up and never come back down to current levels again.

There are reason why you should stay out of the market though, so you have to weigh your personal situation when you make any of these decisions.

On 4/4/2023 I Tried This Recently - How Am I Doing?

On 4/4/2023 I decided

So Far Market Timing Was A Bad Idea

From the chart above, we see that I sold my S&P 500 Index at 4,100. The market then moved up and down (sideways) until May 24, 2023, and it shot up to a high of 4,600 on July 31, 2023 - a gain of 12% from my sell point.

I took the chunk of money I got out of the market and put it in bonds making around 5%. So today, nearly 6 months later, the equivalent sell price of 4,100 is 2.5% higher at 4,202 (4,100 times one half of 5% interest). That would be the break even point. With the market at 4,258 right now, that is 1.3% away.

Should I Correct My Mistake and Get Back In?

That is the question isn't it? Should I put that chunk back in, or do I wait for it to go lower? That is always the question - and unfortunately we never have the answer for it until after it has happened. Flip a Coin, and do that, or quit timing the market and diversify using the Set-It and Forget-It Portfolio.