By Ben Carlson
A Wealth of Common Sense
Market timing is hard. And once you do it, market timing can lead to a cash addiction.
When markets are falling you assume they will fall even further. Cash becomes a safety blanket.
When markets are rising, you assume they are too expensive and will correct at some point. Again, cash becomes a safety blanket.
Market timing is hard not just because you need to be right twice for it to work—when you get out and when you get back in. It also requires the courage to get back in when you don’t want to.
There are a few ways around these fears.
I’ll start with the spreadsheet strategies and then move on to the behavioral approaches.
The commentary is the opinion of the author and distributed with permission under limited license. All data and charts presented herein are from sources deemed to be reliable but are not guaranteed to be accurate. The financial information presented is for information and educational purposes and is not a substitute for professional advice; use of or reliance on any information herein is solely at your own risk. Edited from the original.