What is “market timing”? Is it trying to continually buy and sell stock shares in effort to beat the natural up and downs of the stock market? Or is it looking at long-term economic trends and try to avoid the harsh downturns and take advantage of sharp upturns to increase investment returns?
Wikipedia says “Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements.” It also says “Whether market timing is ever a viable investment strategy is controversial. Some may consider market timing to be a form of gambling based on pure chance, because they do not believe in undervalued or overvalued markets. The efficient-market hypothesis claims that financial prices always exhibit random walk behavior and thus cannot be predicted with consistency.”
But are there once in a generation events, such as the 1987 crash, the Great Recession of 2008, and the 2020 COVID-19 crisis that investors should have seen coming and prepare? While some may say these events could not have been foreseen, some investors saw these events coming, such as shown in “The Big Short”. In addition, Silicon Valley preppers said they saw the COVID-19 crisis in January 2020.
The question is there a way to see the tipping point for large economic changes.
On a personal, in January 2020, as the Dow passed 29,000 I read about issues in China around the Corona Virus and had thoughts it was time to get out of the market. However, the bull run that continued for another month was an illusion and it all came crashing down.
So are the large events, or smaller events that can be projected without falling into the day trader field? That is what this website will examine.