$&@ Timing the Stock Market! That’s how I feel right now. I want to document this feeling for people learning how to invest by following my journey. Only 2 days after writing this awesome post “Why I Invested $21,000 On the Dow Jones Worst Day In History,” the S-and-P-500 Index decided to drop another 100 points on Thursday! That drop made me wish I would have bought my $21,000 of stock today rather than on Monday. It would have been cheaper. I could have gotten a better deal. But I didn’t. And now I have to live with the buy I made. I am writing this article to show you that no matter how much you plan, prepare, and read, you can never truly time the market perfectly. You can only do your best, and take a long-term approach with the decisions you’ve made.
That’s why I am thinking #@^%!@#$#$^&%$#@ trying to time the stock market this morning! A financial adviser once told me a piece of advice that will stick with me forever. It’s a vital concept. In 2016 I asked him, “Is today a good time to Invest?”
He looked back at me and responded, “The problem with trying to pick a perfect day to invest is that it’s like trying to hit a moving target. You’ll think you’ll have the target all lined up. But when you pull the trigger, the target can move to another day. The market’s low can disappear and re-appear. Where did it go? There it is! No wait, it moved over there! It’s behind us. You never really know where it is. The problem with trying to time the market perfectly is that it’s changing shape and moving all the time. What can look like a great decision today, can look like the wrong decision tomorrow. The market is always changing and moving no matter what you think it will do.”
In fact, the market reminds me of the alien in the movie, Predator sometimes. It’s impossible for a human to beat it because it can change shape, appear and disappear, and do the unexpected at any moment. You can only try to guess where it will be, and even then, the market can and will surprise you at any moment. In fact, here is a clip of Arnold trying to fight the Predator. I feel like Arnold when I try to time the market, and the market is the Predator trying to show me I don’t have control. Haha.
The beauty in that clip shows neither attacker knows what’s going on. They’re both shooting blindly, just trying to figure their situation out. The same is true with the stock market. You don’t know the stock market. The stock market doesn’t know you. You’re both just trying to figure your situation out, which leads to some awkward battles as you try to figure each other out.
My experience learning how to invest is that it’s all about just doing your best, and jumping in when you have the cash and the opportunity is there. Do what your gut tells you. When I invested the $21,000 four days ago on Monday, I had never before seen a 100+ point drop in the S and P 500. The drop got me excited. The 8% sale price was alluring. It made me want to get in, and not miss it.
I use past experience as reference points to make current decisions. My past experience has shown me a 20% drop is possible as it happened in February of 2016. That drop lasted about a month. And then I remember the Brexit drop in June of 2016 where the Dow Jones dropped 900 points in 2 days. But that drop barely lasted a week before it shot back up again. This experience told me that I really didn’t know what would happen during Monday’s drop. Would it last a month like 2016? Years like 2009? Or was it just going to be a flash drop like Brexit and recover in a week? I bet that it was going to be a flash drop like Brexit. But I was wrong, because it dropped again on Thursday 2/8/18, and the market provided even a better buy-in opportunity yesterday than what I got on Monday.
I’m writing all of this to let you know from my experience that no matter how much you read, prepare, think, and stress over making the right decision over the stock market, you will NEVER know what will happen in its short term.
These are the lessons I want to share with you: As an investor, you will NEVER know where the bottom of the market lies. Do you go in at an 8% dip? Do you jump in at 10% dip? Do you wait for a 20% drop? Or do you wait for an all-out major recession and correction? You can see from my experience and examples, that the market is constantly changing and moving and you will never truly know what the perfect decision is.
The only guaranteed way to win is to invest consistently, over a long period of time, and do your best to leave your investments in the market no matter what happens in the short-term. Always remember that short-term money comes and goes. You can be up $500 one day, and down $1000 another day. But short-term money isn’t the money that leads to wealth. Money that is invested for the long-term will stick around for the long term. Long-term money is the type of money that leads to wealth. No matter when you buy in, always plan on leaving it in there for at least 5 years. Only take it out if you can find a better investment for it, like we did with our first real-estate purchase last spring when we sold $34,000 worth of stock.
So today I’m feeling kind of like: “$^&*%@ the stock market!” because yesterday’s 2% drop wasn’t great for my short-term investments. But thank God I know to only rely on the stock-market for making long-term money and long-term wealth.
Remember this as you invest: The stock market can be like a moving target at times. It can burn you unforgivably in the short-term, but it can bless you unbelievably in the long term. As always with investing: Try to buy as low as you can, as consistently as you can, and hold on to your investment as long as you can. Don’t worry about what happens in the short-term. The target is always moving. The world is always changing. The path to wealth is by always investing and making wise life decisions over a long period of time.
Short-term results don’t matter if you have your vision set on being great in the long-term.
Read the article that inspired this post: “Why I invested $21,000 on the Dow Jones Worst Day In History.”