Updated: Mar 29
I previously shared a finexis flyer that helps our clients ask important questions and make considerations before investing. You can read it here: https://www.gladystanjy.com/post/5-questions-to-consider-before-investing
But what if you've already invested...
Only for a correction to happen soon after?
And it has happened to the best of us.
The point here is this: It is almost impossible to time the market.
Learn from the Greats
I recently came across this article in The Wall Street Journal about Isaac Newton.
What has Isaac Newton got to do with your finances, you ask? Quite a bit, actually.
Newton had so many credentials to his name. Apart from being one of the world's greatest scientists, he was also a 'financial pioneer' - he pushed the British government to migrate from silver to gold, etc. But even someone like him can make mistakes in investment.
What was his mistake?
Not buying and holding continuously. Instead, he cashed out (at least ideal timings) and then re-enter (at possibly worse timings).
What Can We Learn From That?
Here's my observation: many people don't seem to understand investing is actually simple.
You mainly need the following to become a prudent investor:
Consistency (to generate compounding returns)
Discipline (to stay on course no matter what)
Objectivity (know how to identify a sinking ship), and,
Flexibility and openness to navigate and explore other waters (aka diversification).
Let's be real, though, doing all of the above is not easy. Because, as human beings, our emotions, greed and fear often come in the way.
Hence we always say it's simple but not easy.
What Do You Do In The Case That You Do "Invest At The Wrong Time"?
When I do meet clients who have unfortunately investment is not the most opportune time, here's what I have to say:
Regardless of the time you enter the market, play the long-term game. Speak to your financial advisor and ask them to show you trends for the markets you've invested in before making an emotion-based decision of pulling out your hard-earned money just because of a crash.
Nobody can guarantee you when crashes will happen nor can anyone project actual gains. In the finance world, we look out for patterns (“History never repeats itself, but it does often rhyme.”), we do our due diligence by keeping you abreast of updates and news that could shift market trends.
Even if a great Mathematician like Newton can time things wrongly, then this goes to say that it's nearly impossible for the man on the street to time the market. Let's not forget the patterns that we've seen before and the lessons we've learned. Let's become more prudent investors to reap healthy profits instead of being greedy for the idea of limitless wealth, i.e. stock market mania.
It did until it didn’t. What gnawed at Newton for years, and what still seems strange, is that his capacity for dispassionate analysis failed him when he needed it most. Here was a man who had calculated logarithms to 50 places. But in the thrill of the moment, he failed to do the math. - Investors Have Been Making the Same Mistake for 300 Years (Thomas Levenson, The Atlantic)
Not sure of what step to take for your investments? Need a lending ear or a non-biased third party? Let's chat.