Time in the Market vs Timing in the Market

A very popularly heard phrase for those who are familiar but for those who are not, let us dig into what it really means. Most of the people who enter stock markets, want to buy at the lowest possible and sell at the highest. The truth of the matter is – none has ever been able to do that, consistently. It’s a matter of chance that someone may have been able to exactly time the right entry and exit points but planning that is a very tough task.

The reason for that is that any market(stocks or Crypto) is influenced by several factors and not just one. There are many dynamics that work together to determine the price we see on the screen and it’s almost impossible for anyone to really control or make decisions based on all of those factors. Instead of trying to find that exact best time to enter or exit, the ones who have stayed invested irrespective of the swings that keep coming every few months or years, have really gained the maximum.

The best way to avoid this mentality and remove the stress for most people is to avoid being a trader and just add at regular intervals based on your spare capital availability and risk appetite.

Another way that helps in addition to doing the above is that when markets fall more than expected, increase the amount invested, thus gaining the advantage of the sharp declines

 

“Success is the result of perfection, hard work, learning from failure, loyalty, and persistence”

Philip Reyes

Eg. if a person can invest Rs 10K a month in normal times, but if the markets make a sharp decline over 3 months, then if their situation allows then maybe make it 20K a month in those depressing months or even wait for a quarter vs doing it monthly. Taking profits is also one key aspect of seeing your investments realize something for you, but all that depends on the goals one has set.

For some, taking gains gives a certain satisfaction and that boosts the confidence to stay invested or add more money in declines, which is fine if we can handle the situation that if prices rise, we are ok. Usually trying to sell at the “right moment” and buying back lower has not worked for the vast majority, unless someone is a savvy trader. There too it’s never a hit and sometimes a miss! The investor who really makes it big and realizes the maximum gains has an objective, time frame in mind, or a certain %gains in mind, stays invested for that long, and is happy when the objective is met! Stay in the market long enough for the market to give you that, vs trying to get in and get out multiple times.