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Tuesday, February 3, 2009

On Market Timing

I have realised that it is easy to sell near the summit of a bull market, when stock prices look ridiculously high.

On the other hand, it is very difficult to judge when we have reached a bottom on a market crash. Having successfully market timed, sitting on cash, you keep wondering - should I buy now? Is it a fantastic opportunity? What if the plunge drops and a rise starts?

But each time you trickle in some money and watch the markets crush it to half the purchase price, you start back in fear - am I getting in too early? Am I going to destroy all the benefits of a successful market timing? Is the market going to swoon for three years and go to half the present value, which would be the real time to buy? Is a future market fall worth waiting for? How long should I wait?

I have no answers to these questions. I have only learned that I have much to learn.

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