Isn't investing more in a downturn 'timing the market'

Investing during a downturn nor investing more during a downturn is timing the market in and of itself.

Traders time the market. They buy an asset with the belief that it will rise in price over a relatively short period of time and look to exit when the price is right.

Investors are different than traders in that investors buy because of value not price.

For example: A trader will buy a Volkswagon stock simply because it is now trading at $100 and at one point in time in the not so distant past was trading upwards of $200. The logic is that the stock will go up eventually and they will get a good ROI. An investor will look at financials, market conditions, the management team, and the performance of rivals to determine indicators of value (will this company be viable and successful for the next 50 years or so) if they believe it will be they will buy it. They may wait because public sentiment is extremely out of whack with the value they see but that doesn't mean they will buy it ANY price (like a trader would if they speculate that it will continue to go up).

Think about it like this, an investor looks at a Laptop and says, "hmm, if I buy this I can make $1,500 more than what I would without it" but it costs $2,000 I might need to wait until I can catch it on sale and if I can't, not buy it. A trader says "the laptop is $2,000 but I'm 75% sure there's going to be a shortage at release so I I'll probably be able to flip a couple for $2,500 a piece if I act quick".

The difference is one is focused on pricing dynamics where the other actually has an objective reasoning for why something is valuable and what is a reasonable amount to pay for it. So when people say don't time the market what they should mean is don't buy a stock simply because the price has gone down. It is basically impossible to make a career out of trading, the real winners are the brokers, and it is incredibly difficult to accurately value individual stocks. This is why most advice goes towards investing in ETFs, Mutual Funds, Indexes, etc.

If you wish to invest in individual stocks it is best to do a lot of reading on value investing as it teaches the principles that work.

/r/personalfinance Thread