I have shared some experiences of my investment in previous posts, in which I try to time the market:
Basic, in the bull market, everyone may earn many easily and has a feeling that they may become a millionaire within just one month. The funniest thing is to figure out the exact time to buy the stock in the dip and sell them at the highest price. However, the truth is, in early this year, who can predict the crash of the market, which had just happened without any sign? Most people didn’t escape from the crash. And in the last month, after S&P 500 reached its lowest level in July, it has rebounded almost 20%! Many people start to say that the bottom has been formed and it is the right time to buy!
Really? We have already in 2 continuous seasons with a negative GDP increase, we still have 8.6% CPI, with many companies starting to freeze hiring or lay off people. Do we have the right macro economy environment to support a bull market again?
To be honest, I don’t know. And most analysts or economists are also just guessing. The biggest lesson I learned in the past year is that I don’t have the ability to time the market. The latest example is my SQQQ holding, an inverse ETF that is shorting the NASDAQ index, which I believe will go to the moon after the CPI hit 9.1 in Jul. However, the makest was all the way up after that. So, the SQQQ holding gives me a big loss.
Meanwhile, I bought the stocks and ETFs based on 2 standards: 1. in the good price range after the big sell-off. 2. having good performance in the long term. When Apple hit 130s(down from 180s in early 2022) and Microsoft hit 240s(down from 340s in early 2022) in May and June, I bought them without hesitation, although I didn’t know if the price would continue to go down. I believe in their futures and think their prices are a bargain! The same example is Target and Walmart, after their down 25% in one day because of the lower sale in the inflation. Look at their price now!
This strategy also works for high dividend stocks or ETFs. For example, SPG, which is a REITs stock and is down from 160s to 90s, and I pick up some. When its price was around 90, its dividend ratio hit 8%! what a juicy number!
You don’t need to think about when is the perfect time to buy or sell. Just choose the stock with the good earnings, good product, and good price to buy and hold. I think we can avoid many losses!