Thursday's Big Jump Shows The Dangers Of Market Timing

Today was a good example of the dangers of market timing. Who knew the Dow was going to spike 284 points today? I sure didn't.

The Pundits were talking about the ominous 'lower highs' and 'lower lows' last time I checked. I guess that did not pan out so well, as the market hit new yearly highs today. It is not worth trying to time the market. If you miss a day like today it is painful; if you miss a few of these it is fatal.

This is not to say, however, that there are not times when your exposure should be reduced. Usually once a decade or so, the market will become excessively valued relative to other opportunities. This is not one of those times.

If you choose to time the market you either better be very, very good or very, very lucky. As Clint Eastwood once said "So do you feel lucky punk? Well, do you?!"

Comments

[Tomaz_Korosec1:]

I do feel lucky and also one reminder, there are a lot of ups downs. I dont give a - if I miss 2 % raise as long as I can escape the 50 % fall,... I think it is more important to get in when valuations are cheap then to chase this mirracle days when you get +2 % etc,.. Timing if different but entering market now and expecting 15 % gains when we had bulls runing 4 years and more, I dont think so.

2007 Jul 13 10:49 AM

[SgtSally:]

Bernake on the whole is kinda lame but he did say one thing pretty intelligent a few weeks ago, "Bull markets don't die of old age".
We have just now attained the level of the market in 2000 (not adjusted for inflation). But there is a big difference in the quality of earnings and in valuations and in the supporting world markets. Are we range bound in some decade long secular trend where todays highs indicate an inevitable retracement to yesterdays lows? It doesn't seem so.

2007 Jul 13 01:40 PM