Silly question: what does it mean to "time the market"?
It's when someone tries to buy and sell their investments at the optimum time (buy it when it's at the bottom and sell at the top).
For example, a lot of people have decided they've had enough of stocks right now and have sold either all their stocks or most of them. They think "I'll just hold my money as cash for right now, but as soon as the market starts to go up, I'll reinvest."
The problem is, very few people are any good at figuring out when the right time is. There are always people that guess
right, but the problem is, it's just a guess.
There are people who are very successful investors who successfully time the market. Often these people invest in a very specific market (say oil) and spend an extraordinary amount of time doing market research. And even then, they often guess wrong.
Warren Buffet is often held up as a guy who knows what to buy and when. He's not the best example because he often buys enough stock so that he has a say in how the company is run as well. It kinda makes his bets a little more solid.
William Bernstein is of the mind that you should never try and time the market. Simply buy a mix of assets that historically gives you the best return for the least amount of risk. The only buying and selling that you do is to periodically "rebalance" your portfolio so that you maintain the same mix of assets. The logic is you won't always beat the market, but you'll always at least match the market (which historically has been 4-8% annually, depending on the asset mix).
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