Whats so dangerous about market timing?
Market timing is an investment strategy based on predicting when security prices will rise and fall and then trying to buy low and sell high. While this makes sense in theory, it’s extremely hard to execute successfully. Market peaks and valleys are not clearly visible until after they have passed. Few investors can repeatedly time their investment decisions to match market movements. Instead, they may rush to buy a “hot” security, only to see its price subsequently drop, or switch out of an investment whose price has plummeted, only to see it later rebound. Investors who flee stocks when the market dips risk missing out on a future recovery. While the goal may be simply to wait out a declining period and then get back in when the time is right, this strategy can backfire. When the market changes direction, it can happen very quickly. By the time investors realize the market is on the up swing, it may be too late to take advantage of significant gains. Instead of trying to time the mar
