Timing the market is tough for even the best stock market professionals. However, if you can see or understand the mood of the market, you just might have an advantage.
However, stock market services can be kinda sketchy. You have to know what you are looking for when deciding on a service to use. Some have a track record, while others are out-right scams.
This what the front page of spytomorrow.com does. You can use the stock market service in many ways. It acts like a stock market timing service too. The indicators demonstrate the pressure of the market. Even if the market is going up, the underlining pressure may be pointing down, which may indicate a good time to sell some or all of your positions. If you have made money, maybe take some off the table.
Does Market Timing Work?
The company line is that timing the market doesn’t work. It’s hard for investors to consistently earn big profits by timing their buy and sell orders based market indicators or various other strategies.
Still, some investors do profit from timing the market. The best way to find a signal with a good probilitiy for accuracy. Test and learn how to use your favorite signals takes time and experience. investors or traders who jump from one strategy to another tend to fail more often.
Why Doesn’t Market Timing Work?
The main reason market timing doesn’t work is due to trader emotion. Emotion is often a traders worst enemy, because they end up buying high and selling low.
It is also true that investors who try time to the market miss the big moves. Much of the market or stocks big gain and loses often come from quick big moves. If a trader is not in or is still in the market during such a move, they can’t make up the big opportunity after.
Is market timing illegal?
Is market timing illegal?
No, There is nothing illegal about stock market timing. It’s A legal strategy where an investor attempts to time the market by buying, or selling stock, options or ETF’s
You Don’t Have An Edge Over The Pros
The main reason is that amateur or retail stock investors have no advantage over the professionals.
The fact is supercomputers and algorithms, retail investing has never been easier for people at home. This means it’s harder to find opportunities as some investors depended on in the past.
In the past, you could find investing ideas by reading financial journals, Wall Street Journal, and trade magazines.
An understanding of technical analysis and access to real-time data is required, especially for day trading. Still, computer algorithms execute trades in nanoseconds, much faster than you can I can.
Competition against the professionals and high speed computers means you need to be right more often. As mentioned above, you can find indicators which give you a good indication what happens next for a stock or market. However, it’s important to use such indicators during different types of markets (bull, bear, flat) and through the seasons of the year.
The Stress Of Market Timing
It’s easy to second guess your self, emotion is a killer when trying to time the market. News headlines and temporary quick moves can lead you to make bad calls.
On good market days you are a hero or maybe, you find your self jumping in a little late for the fear of missing out. It can be even worse when you sell in a panic when a stock or market heads down.
Sometimes when you are wrong, traders try to make up for their mistake and this often leads to more failure.
Trying to time trades and the market can be extremely stressful. This is why it’s important to have a plan and strategy that you stick with through the ups and downs.
Missing the Best Days
If you examine a list that shows the best 15 days for the S&P 500. It’s interesting to notice that all of the days occurred within bear markets, not the bull markets as you might expect.
The fact is, the big upturns in the stock market often happen during times when it’s hardest to invest or you’ve had enough pain and its time for your to get out of the market and wait for better days.
Looking at the dates, you’ll find the well known dark times for the stock market: the 2008 financial crisis, the dot-com crash, the Black Monday crash of 1987. A handful of these best days happened in the first quarter of 2020, which by any definition was historically bad.
By trying to miss the worst days, investors are likely to miss the best moving days. In studies of behavioral finance, “recency bias” suggests that someone’s most recent experience has the greatest influence on their decisions. Emotion hurts investing choices. Investors tend to sell after a meaningful market selloff and buy after a market rally. They sell low and buy high.
Just by missing the 10 best days (out of more than 17,500 trading days since 1950) has a huge long-term effect on a portfolio. For example, an investor who invested $10,000 in the S&P 500 in 1950 would have gained 7.5% annualized and end up with a portfolio value of more than $1.5 million (as of 3/31/2020) if they had remained fully invested (not including dividends). The final portfolio value for an investor that missed the 10 best days is less than half at $700,000.
However, it is rare an investor will only miss the best days if they sell in an attempt to time the market. They might also be able to miss a few of the historically bad days. However, the cautionary tale of attempting to time the market is the same: There can be a huge cost to pay if the market swings to the upside while you’re on the sidelines. It would take exceptional timing skills to get in and out of the market perfectly, particularly since it needs to be done in short order given the market’s best and worst days tend to cluster close to one another. Staying the course is the best plan of action during periods of severe market stress. There is an old investing adage: “Time in the market beats timing the market.”
Owning stocks on historically bad days can be painful, however, outcomes over the next year tend to be positive. The big up days. Investment industry giant BlackRock recently published a table showing one-year returns following the worst days for the S&P 500. The average one-year return after a historically bad day is about 24%. Amazingly, there has only been one instance of a negative return.
Honestly, this is why we have Spytomorrow.com. We are trading every day, based on the signals. Getting it right about 8 out of 10 times tends to be rather profitable. Plus, no need to time the market.