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15 Quotes That Prove Market Timing Is a Huge Mistake

By Rachel Warren - Aug 14, 2022 at 8:00AM
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15 Quotes That Prove Market Timing Is a Huge Mistake

Market timing is a lose-lose game

With the volatility the market has been seeing over the past months, it's only natural that some investors feel unnerved by the current state of things and are worried about the long-term health of their portfolio and investments. Of course, determining the perfect moment to get in or out of the stock market is next to impossible and will rarely beat the tried-and-true strategy of patiently and consistently investing in all markets.

If you've considered whether an attempt at market timing might be a way to boost your returns in the current environment, you're not alone.

Here's why that would be a big mistake.

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1. "Only liars manage to always be out during bad times and in during good times." -- Bernard Baruch

Catchy headlines and seemingly earth-shattering predictions about what the market will or won't do next may grab the attention of investors. But the reality is that no one can forecast with certainty what lies ahead.

Being a successful investor doesn't require you to predict the down periods and only put your money into stocks when the market is up. In fact, trying to do so will almost certainly lead to frustration and failure. The mark of a successful investor is one who has the mindset and fortified strategy to continue to invest in all market environments and achieve sustained, durable portfolio growth over a period of years.

ALSO READ: 2 Recession-Proof Stocks Investors Should Have on Their Radar

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2. "The underlying driving force behind market timing decisions seems to be emotional -- fear, greed, chasing performance -- buying something after it has gone up, disappointment, and sales after something has declined." -- David Swensen

Emotions are high right now, and understandably so. But letting emotions rather than sound investing acumen determine how you build your portfolio is a recipe for disaster. When emotions are high, it's better to leave your holdings alone than to make a rash decision in the heat of the moment that could impact your portfolio for years to come.

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3. "In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility." -- Benjamin Graham

Looking back at the periods leading up to past market crashes, it's often easy to see the hallmarks that may have indicated a downturn was imminent. While downturns are predictable in the sense that they have happened fairly regularly throughout the history of the stock market, pinpointing the exact moments to get in or out is next to impossible.

This method also needlessly convolutes investing, which in and of itself can and should be formulated around a simple strategy: Build a diverse portfolio of great companies, hold them for at least several years, add to your winners and trim your losers, let compounding returns do the work for you, and repeat.

ALSO READ: 3 Reasons It's the Perfect Time to Start Investing -- Even in This Bear Market

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4. "We've long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place." -- Warren Buffett

Few investors have been as successful as the Oracle of Omaha (and his right-hand man, Charlie Munger). While he hasn't been a perfect investor -- no one is -- his habit of regularly investing in stable companies with solid trajectories for growth and compelling leadership continues to produce results that are the envy of many. While most investors don't have the capital that Buffett has to work with, his tried-and-true philosophy of buying companies that can deliver value and growth over a period of years, and staying invested in those companies as long as the thesis remains intact, has proven incredibly effective many times over.

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5. "It makes no sense for individual investors to jump in and out of the market. People who trade in that way rarely die rich, whereas the patient investor often does." -- Philip Carret

Long-term investing is both the easiest and hardest way to invest in the stock market. How can this be? Easy in the sense that a robust long-term investing strategy doesn't have to be complicated. Difficult in the sense that it requires the patience and resilience to remain in the market during volatile periods and continue to invest in all types of markets.

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6. "My stocks sometimes get overpriced, but in the long run this kind of company … will outperform the market and the economy. The worst thing you can do is try to catch the swings, sell out too soon and be afraid to buy back in." -- Philip Fisher

Valuations matter, but a cheap or expensive stock in and of itself shouldn't drive you to hit the buy or sell button. It's natural to want to be able to buy a stock low and sell it high. That being said, attempting to time decisions about your portfolio around the supposed bottom or upward swing of the market could result in missing one or both.

ALSO READ: Nasdaq Bear Market: 3 Remarkable Growth Stocks That Can Double Your Money by 2026

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7. "The only problem with market timing is getting the timing right." -- Peter Lynch

There are many potential pitfalls with attempting to time the market, but this quote illustrates all of them rolled into one. If investors had some way of divining what the market would or wouldn’t do next, there's no denying it would certainly alleviate the unrest and fear that arises during volatile periods.

But that's not how the stock market works. The stock market is composed of many moving parts and driven by a wide range of factors that can change at any given moment. The market isn't always consistent, but it is cyclical. Your consistency is what can enable you to maintain the upper hand over the long term.

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8. "Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient." -- Warren Buffett

Rather than trying to implement complex and time-consuming (not to mention rarely successful) market forecasting strategies, base your investment decisions around the fundamentals of the business itself.

What do its balance sheet and other financials look like? Do you understand the business on the whole? What are its current and future pathways to growth? Do you have confidence in leadership and the direction in which it's taking the company forward? What is the company's competitive position within the industry or industries it operates in?

ALSO READ: 5 of the Safest Warren Buffett Stocks You Can Confidently Buy Right Now

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9. "It must be apparent … that if anyone possessed the ability to do so consistently and accurately he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public." -- David L. Babson

In the current day and age, there's no shortage of purported investment gurus wielding marketing strategies designed to make investors think that they have the secret sauce to investing. An attempt to time the market may bring about the desired result once in a blue moon. But sustaining profitable returns over a period of years by trying to invest in this way simply isn't practicable.

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10. "Setting a goal, developing an appropriate asset allocation, and selecting a handful of funds are not hugely complex tasks. The hard part comes next: battling your emotions so that you can stick with your plan through thick and thin." -- Andrew Clarke

Maintaining a forward-thinking, value-driven mindset as an investor is equally as important as the stocks you pick for your portfolio. In fact, if your mindset isn't right, your strategy may easily falter and you could find yourself struggling to build a robust and stable portfolio. Emotions have no place in a well-run portfolio, and giving into them will only derail you on your path to achieving your long-term investment goals.

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11. "Bottoms in the investment world don't end with four-year lows; they end with 10- or 15-year lows." -- Jim Rogers

You're not alone if the choppy state of the market over the past months has made you feel discouraged. And you're also not alone if you've seen significant portions of your portfolio trend downward, upward, then down again amid the extreme volatility. But when you're invested in the stock market for many years, even a few years of extreme volatility are a relatively brief period within that time frame.

ALSO READ: The Ultimate Growth Stocks to Buy With $1,000 Right Now

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12. "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." -- Peter Lynch

No investor likes to think about market downturns or recessions. However, these occurrences are an inevitable reality that will happen at some point in your investing journey. This knowledge shouldn't deter you from investing, but it may help you separate the companies for which you have a sound buying thesis from the ones that are founded more around shorter-term sentiment that may falter in a choppy market.

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13. "Trying to anticipate any market's ups and downs can be a costly, and futile, exercise." -- William McNabb

Are you working to build a portfolio that stands the test of time? Well, making stock-buying decisions around market guesses isn't an effective or sustainable strategy. Regularly investing your money into quality companies that you believe in and are willing to hold for the long term, and staying invested in them when the market is down as well as when it's up, is how you build such a portfolio.

ALSO READ: Should You Invest During the Stock Market Rally?

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14. "The odds that you will achieve long-term success by actively trading or timing the market round to zero." -- Morgan Housel

A habit of consistent investing takes out the need for guesswork. Yes, you will experience the down periods in the market when you stay invested over the decades. The good news is you'll also benefit from the best days in the market while other investors stay out or try to implement highly flawed market timing strategies with an infinitesimal chance of long-term and continued success.

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15. "The idea that a bell rings to signal when to get into or out of the stock market is simply not credible … I don't know anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has." -- Jack Bogle

During times in the market where emotions are high, it's easy for investors to be distracted by fads and purported get-rich-quick schemes. The truth is, there are no guarantees in life, and investing is no exception. And anyone that promises a foolproof timing strategy during any type of market should make you head for the hills.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Trying to time the market unnecessarily complicates investing

If you're closer to retirement, focusing on more stable-growing companies and consistent dividend payers could lend greater balance to your portfolio and counteract the impact of current volatility. If you're many years away from retirement and/or have a higher tolerance for risk based on the composition of your portfolio and your personal financial goals, there is also no shortage of compelling companies begging to be bought right now.

No matter what stage you're at in your investing journey, these down periods in the market provide a wealth of attractive investment opportunities for those ready and willing to seize them.

The Motley Fool has a disclosure policy.

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