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It seems to be rather impossible to time the market. Thus one often reads the advice "Don't try to time the market". But why is it bad to try to time the market? I mean it's probably useless, but why would it be worse than another strategy? I would assume that it is neither better nor worse, precisely because you cannot time the market.

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    The New York Times has an interactive demonstration where you can try to "time the market" , just to give you some visualization of how your decisions affect returns compared to the base index. – IVcrush Mar 1 at 16:25
  • @IVcrush Do you have a link for this? – glglgl Mar 18 at 14:35
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On an average day, the stock market goes up. Therefore, if you spend a day out of the market, you've missed out on a day's worth of gains.

That's really the entire reason.

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To be successful when you time the market you have to get it right both times.

Yes, getting out just before the drop starts is great, but when is the bottom? If you get back in too early you can still lose a lot, if you get in too late you missed part of the gain. Plus all those months or years while waiting for the right time, many buying opportunities might have been missed.

The issue is also true when prices are rising. You have to decide when buying is this the top, or will it go higher? Then after the prices start to drop you need to know is this a blip? a correction? or a crash?

Of course sometimes trying to time the market, means you pick the worst time to do something. Other times you guess correctly.

When people mention timing the market, they aren't tweaking their investments, they are making big bold moves.

  • It is deciding to sell their house now and rent because the market is about to drop...
  • It is deciding to get out of stocks and going all in on bonds...
  • It is getting heavily into cryptocurrency because prices have gone up 500% in 6 months...
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  • It's a thoughtful answer. I'd offer that one does not suddenly decide abruptly one day to go from zero pct invested to 100% invested or vice versa. In a bear market, one transitions out incrementally. That was appropriate in 2000 and 2008 where the bottom was 15+ months away. The rebuttal is OK, what about this week? This week, you had to have risk averse strategies in place in order to limit the the carnage. It really boils down to risk and reward go hand in hand. If you want the big gains, you bear the risk. If more modest gains are acceptable, you can limit the risk. – Bob Baerker Feb 29 at 22:25

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