Much has been written about the virtues and dangers of active stock market trading, or “market timing.”
Most of the pundits and so called «experts» will tell you that stock market timing doesn’t work, that it’s dangerous, and that «buy and hold» is the best and only way to invest.
But this conventional wisdom is patently untrue. Here are the facts based on my research and extensive real time experience.
If you want to be a successful stock market timer, you need three key elements:
1. A system that actually works.
2. Discipline to follow the system.
3. Patience to stick with the system long enough to make it work for you.
And it’s tough to do all three.
Most market timing systems don’t work. Or don’t work consistently enough to be valid. Some will work in trending markets but get slaughtered during flat times. Most systems don’t work in all markets.
Investors lack the discipline to follow a proven system. Once an investor finds a viable program, he or she needs the discipline to follow it. Sadly, some either can’t or won’t do that. When they let their own judgment or intuitions interfere, they don’t get the results they want or could have enjoyed by simply following the buy and sell signals they receive.
Investors lack the patience to stick with their system. Many investors are constantly in search of the Holy Grail, a program that never loses a trade. The fact is, no method will win every trade, and investors without patience will find themselves hopping from advisor to advisor with no rewards to show for their efforts.
However, there are a number of proven systems available that recognize these pitfalls and successfully time the market to massive profits year after year. Anything you hear or read to the contrary is simply not true. Wall Street has a vested interest in opposing stock market timing because it is a threat to their very existence.
Investors have two choices. They can pursue the conventional wisdom of buy and hold and hope for the best, or the modern investor can educate himself and find a timing system with which he is comfortable to protect and grow his wealth. There are a number of proven options available, but the absolute worst thing one can do is listen to the pundits who tell you that “stock market timing» doesn’t work.