A simple game that shows you how difficult it is to time the market

I'm not sure how you can call it a lie when almost every piece of data you find shows that everyone loses over the long term by trying to time the markets. If you want to show proof to the contrary, you need to offer evidence that it is possible.

So far, that evidence is truly hard to come by.

As China has reported weakness over the past year or two what did you to prepare for their coming crash? (I sold my ASUS ADR).

What are you doing to prepare for if/when Bernie Sanders wins? When the Fed finally raises rates? When oil bottoms?

All of these things require timing. Believe it not, plenty of people knew pre-2008 that shit was going to hit the fan with the housing crisis, just like we know now that the rising student loan debt is a problem now.

The problem is that it's like a game of musical chairs. We don't know when the music is going to stop, and odds are you'll make suboptimal decisions by trying to guess, especially since it's also very difficult to predict the magnitude of the effects (which can trigger even more effects, for example large drops tend to trigger lots of fear).

It does take work; you have to be prepared with knowledge about a wide range of companies and how they are currently trading so you can quickly strike when the opportunity presents itself.

This is the "informational edge" argument, the idea that if you just research things deeply enough, you'll "know better" than the markets and be able to exploit them for profit. So far I don't see any example of this being true. We have plenty of anecdotes of people who make good guesses and happen to be right, but we never hear from the people who make those same guesses and fail.

If you wish to contradict me on these points, would you be willing to answer the very same questions you posed to us? What is your approach for your positions when it comes to Bernie Sanders? The Fed raising rates? Oil? China?

/r/personalfinance Thread Parent