The Art of Market Timing

Balki says Market Timing is for FOOLS, Don’t be Ridiculous!

I love the stock market, it is fully 33% of my FIRE plan, but the way I do stocks is a far cry from how I started out playing stocks.

One of the great advantages of reading through other people’s blogs is that you can get advice from all my ‘mistakes’. It’s as if we have been financial friends since the year 2000.

Here are some of the questionable things I used to do that I no longer believe are good ideas;

I would buy stocks in batches that were too small. Spending $9.99 (old school price) to buy $50.00 worth of a stock is bad planning. I made Ameritrade (just Ameritrade, no TD yet) a bunch of money for years before I became more patient about my investing.

I would buy stocks based on the wrong metrics. Meaning, I liked owning quantity over quality so I would often go for a cheaper stock all things being equal because I could buy more shares of it???

Next, I would chase RETURNS. That way lies Madness.

I would buy stocks after reading their Obvious Puff Piece after the price had done its predictable jump.

I would sell stocks after they made a decent profit to raise cash to buy ‘new to me’ stocks. Like when I sold my APPLE at $90 and my AMZN at $73. Hey I made money, but what if I would have kept them. (looks off into the distance mournfully).

I called the Ameritrade hotline twice a day to listen to my stock prices and record them by hand on a legal pad. Trust me, I know there was probably a better way to do this, but I think I liked it. It made me feel like a Big Shot.

Furthermore, I also bought speculative stocks, no dividends, just ones I thought would rise, some did, some didn’t.

THEN I started learning more about FIRE, wealth preservation, the beauty of dividends, and the wisdom that comes with growing older.

I stopped thinking I was Gordon Gecko.

So 10 years after I started, I began the following GOOD stock buying habits;

Buy a nice diverse batch of quality companies that pay DIVIDENDS consistently.

I shoot for an average 3.5% dividend rate for the portfolio.

I line my nest with different sectors and parts of the world.

Reinvest my dividends but not Automatically, I let the cash pile up into $300-500 stacks, then I buy more of a specific stock. Stocks that I already hold that I want to accumulate.

I don’t get suckered in by REITs and their Big Returns (well no too much anyway).

I buy companies that my wife uses because she does not like to shop and the brick and mortar economy is going to die.

Sold all the companies that are too EVIL for me to feel good about making money with them. (sorry Monsanto).

I sleep well because my Portfolio love is not based on the up and down value of the stocks overall. My Portfolio is based on the underlying $ it produces through Dividends.

Bonds and Cash are for countering the worry of perfectly normal stock market corrections.

Anyway, my point is Timing is everything, and nothing.

For the record and for bragging rights. I wanted to find a screen shot of my activity during 2008 & 2009 but I merged my accounts and could not produce proof from that far back. BUT,

I lost money in 2008 like everybody else. However, I DUMPED a sizable reserve back into the markets March 6th, 2009, I missed the TRUE BOTTOM by 3 Days. Suck It Gordon!

Wish I knew who to credit for this, ““The market is like a boy playing with a yo-yo while walking uphill. Monitor his progress, do not watch his yo-yo.”

My current Stock Portfolio is available for your Voyeuristic Pleasure.

I was interviewed about my Investing strategies with TurningPointMoney in their ‘DYI Investors Interview‘ segment.

9 thoughts on “The Art of Market Timing

  1. Looks like you learned a lot over the years of investing. All good lessons to say the least. For me, and being a long term dividend growth investor it’s all about long term consistency which means making buys every single month no matter where we are in a market or business cycle. That’s how I play the timing game. I just buy at least once a month and keep building.

  2. Meeooowww that is one sexy, diverse looking portfolio!

    I had 20ish shares of Juniper from last year but I dumped them at a tiny loss a week ago. May you have more luck than me 😀

    What are some companies you consider evil?

    • Whichever ones my wife says I am not allowed to own :). I used Monsanto as a great example, a real money maker, but just too world ruining for my conscience. The other part of our agreement is that if the company has some bad aspects, like Dow Chemical or MO (cigarettes), I have to donate a certain % of profits to charity.

  3. Ben Graham would say that it’s ok adjust your allocation based on pricing (valuation) but not timing. I believe it’s Chapter 4 in the Intelligent Investor (little in Chap 2 too). He said that the intelligent investor should have between 25% and 75% in stocks with the inverse in bonds. That’s a pretty wide range. And the range depends on how high the stock market is valued among other things.

    I like investing in dividends too. It’s much easier to sleep at night when you have money coming into your account instead of being whacked by poor performers. Sounds like a strategy but make sure you’re careful on your allocation to stocks.

    • The wife’s 401(k) is heavy with bonds to balance out our stock exposure here. I keep it overall about 75/25 based on our age(43).

  4. I just read about this post in the interview you did with Turning Point Money. Nicely written. I would guess everyone makes the same exact mistake when they start. Its natural and its what everything around you tells you to do. I even wrote about this in a post on investments a month or two ago.

    Anyway, I think the real secret in your success is this “I buy companies that my wife uses because she does not like to shop and the brick and mortar economy is going to die.” Pretty similar to what Peter Lynch used to say actually.

    Also, you’re probably familiar with Justin from Root of Good. He once tweeted this: “I asked my wife what Sephora is and she responded “Isn’t that something you put on your camera lens to get a different tint?””

    Seems like there is a theme here…

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