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How Do I Invest? Part Two: Timing the Market or Regular Investing?

Updated on March 19, 2012

Market Timing

Over twenty-five years of personal investing, I have heard a lot of questions as to "How an investor times the market?" I have also heard some "experts" claim great timing at high points in the market and great timng claims for falling markets.

I hereby freely admit that I have in the past lost a lot of money, several thousand dollars trying to time markets. My worst error was listening to an expert praise a small entertainment software compnay which was trading for "pennies". I had followed my gut instinct avoiding all Tech stocks throughout the 1990's. By the end of 1999 I was ready to "believe brothers and sisters>" So I bought, two weeks later the stock was no longer trading. All the cash was lost.

My only motive I didn't want to miss the boat again. Trouble was this was no "Queen Mary" this boat was a "Titanic"!

So the point behind my story? There will always be an expert to tell you what to buy and when, and this is always the point in the market when you will profit. They may be right but let them invest their money, only go into something you feel good about and something you have considered after long deliberation. Well at least the time it takes to take three steps, away and to walk back.

Regular Investment

In the recent market crash. I lost up to fifty percent of my total portfolio value. Some stocks faired better than others. In fact some rose. I was for instance lucky to buy Burlington Northern (BNI) a couple of days before word got out Warren Buffet was buying into the same company. Good judgement on my part? Good Luck? Inside information? No to all these with a tip of my hat to Good Luck.

I now like to invest little and often. A few hundred dollars a month go into my Roth IRA and some on the side portfolios. I like tax free-bonds so they are a relatively safe buy. It just happened I had been watching BNI for several months and looking into their company reports. Seeing what they expected for their business. Railways are good, they own real estate, they move freight which consumers buy, they are "green" (to my mind) They also provide a solid platform of long term results. Though the economy may go up and down and their revenue goes the same way, they are there in the landscape. A permanent fixture.

So for my regular monthly investment I chose BNI, and did not regret it. My most successful piece of market timing.

For ease I invest on the same date every month. my plan puts money into my stocks and bonds on the 10th. or the nearest date after if it is a weekend or holiday.

"Why the 10th?" You may ask. I get paid any day up to the eighth of the month so the tenth is the first day I can guarantee cleared funds in my bank.

"Why not wait until later in the month?" Because then I might be tempted to spend the cash on something else and not invest. To be successful at investing one should know themself and be honest with ones bad habits. I spend if I don't invest.

By investing regularly month after month throughout the worst of the period of the crash my portfolio is now about fifteen per cent below its value at the start when the market was at its high point. The benefit of holding and not liquidating and then maintaining the regular investment should mean my poertfolio returns to pre market crash value long before the market returns to the level of 12,000 points again.

If anyone has any questions or comments please feel free to speak up. I am interested in learning if this hub is useful and any items which you might want to read about in the future.


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