market timing is the strategy of buying when the market is low, and getting out when the market reaches its absolute peak. the ability to market time is like a superpower. if you can do it, you wouldn't tell anyone about it. unfortunately, no one in the world can market time effectively on a consistent basis. those that can, you will probably never hear about since they aren't going to share their powers. people get lucky, but that's about it. for example, there is an investor, we'll call him mr. m. mr. m invested $250,000 in the market back in 2004. he cashed out at $700,000 on july 2007. the market peak was august 2007. now i don't think this guy is a genius. far from it. his timing may have been luck, may have been due to some shrewd investing, or he may be a market timing guru. i doubt it's the latter, but if he successfully does it again, i may change my mind.
the market right now is pretty beat up. has it reached the bottom? maybe. the tsx was at a high of 15,000 points, and now it is below 10,000. that's a huge drop. the past week we've seen consistent drops, repeatedly. we're not talking about a slight slope, we're talking about deep cliffs. the problem with wondering when the bottom will hit is that you don't know you've hit bottom, until you've already hit it and by then it is too late.
warren buffett, one of the most successful investors in the world, put in several billion dollars into the market a couple weeks ago. but it's been dropping since then. he may have been a couple weeks too early. the key, i find, is to put money in when the world is going to implode. and that's what we've been seeing in the past week, with asian markets dropping nearly fifty percent and everywhere else almost as bad. when everyone says the world is ending, that's when you put money in. as buffett said, "be fearful when others are greedy and greedy when others are fearful." and people are fearful right now. fear is definitely in the air. i haven't felt this level of fear from the general public since 9/11.
so i put in some money yesterday, to dollar cost average since i bought pretty high before. do i think the bottom is here? i have no idea. truth to tell, it'll probably get worse before it gets better. i don't think any real recovery can come about without some true systematic change, as well as the lubrication of the banking system to free up cash (which is what that $700 billion u.s. bail-out plan was supposed to do). but all i know is that the markets will come back. i previously bought some funds at around $29 a unit, which are now down to $15. averaging out the buys will help me out. i plan on buying a little more soon, sort of slowly buy in, depending on how the markets look. if this week was indeed the bottom, i'm gonna be kicking myself that i didn't put all my money in yesterday. but such is investing.
the market right now is pretty beat up. has it reached the bottom? maybe. the tsx was at a high of 15,000 points, and now it is below 10,000. that's a huge drop. the past week we've seen consistent drops, repeatedly. we're not talking about a slight slope, we're talking about deep cliffs. the problem with wondering when the bottom will hit is that you don't know you've hit bottom, until you've already hit it and by then it is too late.
warren buffett, one of the most successful investors in the world, put in several billion dollars into the market a couple weeks ago. but it's been dropping since then. he may have been a couple weeks too early. the key, i find, is to put money in when the world is going to implode. and that's what we've been seeing in the past week, with asian markets dropping nearly fifty percent and everywhere else almost as bad. when everyone says the world is ending, that's when you put money in. as buffett said, "be fearful when others are greedy and greedy when others are fearful." and people are fearful right now. fear is definitely in the air. i haven't felt this level of fear from the general public since 9/11.
so i put in some money yesterday, to dollar cost average since i bought pretty high before. do i think the bottom is here? i have no idea. truth to tell, it'll probably get worse before it gets better. i don't think any real recovery can come about without some true systematic change, as well as the lubrication of the banking system to free up cash (which is what that $700 billion u.s. bail-out plan was supposed to do). but all i know is that the markets will come back. i previously bought some funds at around $29 a unit, which are now down to $15. averaging out the buys will help me out. i plan on buying a little more soon, sort of slowly buy in, depending on how the markets look. if this week was indeed the bottom, i'm gonna be kicking myself that i didn't put all my money in yesterday. but such is investing.
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