When you look at the stock market, it’s very human to want to “time” it, that you can buy a stock at it’s lowest point, sell it at its peak, and make oodles of cash. When Apple first IPO’d, it was selling for about 14 cents (when stock splits are taken into account) and it reached an all time high at closing of 180.96$ just within the last year. If you’d bought 1000$ of Apple stock at IPO, and sold them in January, you’d be a millionaire. Even if you weren’t born in 1992, if you’d bought 1000$ of Apple stock in January of 2019, you could have caught it at a price of 37$, giving you a nearly 500% return if you’d sold it in January 2022. This isn’t even taking into account the dividends paid by Apple, which would have increased your return even more especially if you’d reinvested them back into Apple!

But timing the market is impossible, or at least that’s what mainstream economists usually think. It goes back to what I’ve said about The Efficient Market Hypothesis, the stock market is believed to approximate a random walk, therefore it is impossible to know exactly when the bottom is, for the market or for any stock. Therefore the hypothesis says it’s impossible to buy at the bottom and sell at the top except by dumb luck. Even if the hypothesis is wrong (Warren Buffett doesn’t believe it), it is still likely to be functionally impossible to time the market because no one can bring together all the knowledge of the entire economy to accurately declare “yes, this is the bottom”

As a silly example, I follow a lot of stock twits on various social media forums, and the consensus in mid-October was that inflation was still roaring and we had a long way to fall. Since then the S&P 500 has gone up around 15%. Will it pull back down? Maybe, but maybe not. Either way, sitting on the sidelines and losing the opportunity to make a 15% free return a month in a half was probably a dumb move. If people could really, reliably time the market, then investing in mid-October to get a free return through late November would have definitely been the play. And if we’re due for a pullback then you could sell now and keep your winnings. Yet I heard not a peep of this kind of advice through mid-October, so I don’t think any of those stock twits could time the market.

Even more silly of an example is looking back at the recent market crash of 2008. The market bottomed completely in march 2009 and rose from there, but it didn’t stop takemongers from claiming that we were due for an even worse crash any day now.

I know my examples are just anecdotes, but basically I haven’t seen any single person who could reliably time the market over any timecourse whatsoever. Timing the market isn’t value investing it isn’t finding good companies at good prices, it would be going all-cash at the top and going all-in at the bottom, and doing this multiple times a year in order to maximize your returns on each up- and down-swing. You occasionally see hedge funds or take-mongers say they’ve gone all cash, but they then usually miss the bottom of the market by a lot and quietly re-enter it after the big gains have already happened, without ever admitting they were wrong.

In these cases, the old adage is probably the most correct: time in the market beats timing the market.