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Why Timing the Market Is Futile

8/30/2022

We have the stocks that could be the next big winners in your portfolio -- if you are savvy enough to buy them now.

Timing the market is futile.

Recall March 9, 2009. Unemployment was skyrocketing, large banks like National City and Washington Mutual had been shut down, and GM and Chrysler were teetering on the edge of bankruptcy and threatening to take down the whole automotive supply chain with them. Things were bad and more bad news was ahead of us. What a foolish time to invest in stocks! Yet, that was the bottom. Why? Because the sellers had finished their selling. However, they don’t issue memos to let others know it is okay to invest again. But from that point, in fits and starts, the market recovered. Eventually, the economy recovered as well.

The stock market hit its recent low on June 17th with the Dow dipping below 30,000 and the S&P 500 reaching 3,636. Since then, stocks have staged a significant rebound despite negative sentiment in the business and investing communities. At recent quotes, the Dow and S&P have risen 13% and 18%, respectively, from their June lows but remain 8% and 11% below their all-time highs. The tech-heavy NASDAQ, once down 35%, has rebounded 24% but is still down 19% from its high.

The $64,000 question is, “Was this the bottom?” The two-cent answer is, “We don’t know.” It is unknowable. But we will acknowledge it is an encouraging sign that markets have retraced about half their declines.

U.S. indicators clearly measure a slowdown, bordering on a recession, but at this point it isn’t even conclusive the U.S. economy is in recession .

The constant presence of so many contradictory variables is why we don’t advocate timing the market. As best as you can, try to ignore the background noise from market pundits and market volatility.

Don’t waste your energy trying to predict the unknowable. Even the once-legendary Elaine Garzarelli got it right just once—calling the 1987 crash. Focus on the few things under investors’ control, such as owning good companies at reasonable prices -- like the three companies profiled in the September 2022 issue of the Investor Advisory Service newsletter.


Read the full market commentary -- and our three selected companies -- in the September 2022 issue of the Investor Advisory Service stock newsletter, rated #1 for performance in 2021 by Hulbert Ratings.

For more information about the Investor Advisory Service, to download a sample issue, or to subscribe to the best investing newsletter in the U.S. for long-term consistent returns, visit Investor Advisory Service.