Investment Timing

Geopulse

Any person related to the investment market knows the essence of selecting the right shares. But, do you think timing of buying the shares plays an important role too?

Lokolo

Of course it does.

On a lowering market, buying more shares can mean greater gains in the future and vice versa.

Totton

Timing the market is fraught with danger imho, probably more down to luck than skill. However if the news is all bad and the markets are plunging it may be worthwhile selling and buying back in, I doubt you'll choose the exact top or bottom though :-)

When the recent crash came I moved mostly into a solid fund (Troy Trojan) rather than sell out and attempt to get back in, that worked okay for me.

Mickey

jimjames

I read an article on Motley Fool re timing and the example they gave was Vodafone. If you'd bought in 2000 rather than 2002 your returns over the last 10 years would be massively different.

I'll try to find the link

jimjames

http://www.fool.co.uk/news/investing/2011/03/18/five-signs-of-a-great-investment-timing.aspx?source=isesitlnk0000001&mrr=0.50

To quote article "Amazingly, the investor who bought Vodafone in 2000 is pulling in less than half the dividend income today of someone who bought the share in 2002. Over time, you would expect that gulf to widen further.
All this is to say that the price you pay for a share matters quite a bit. But how do you know what constitutes a good price?"

Rollinghome

Arguably it's more important than anything else.

You could pick a basket of shares with a pin and if the timing was right, such as two years ago, made huge returns. Buy at the wrong time, such as three years ago, and lose a packet - with the obvious proviso that you haven't gained or lost anything until you sell which involves further timing.

You could have gained or lost from almost any stock whether a dog or not, RBS, Rentokil, even Northern Rock, providing the timing was right. A lot of people seem to concentrate only on what they see as the prospects for a stock rather than the current valuation.

It amuses me when people selling managed unit trusts claim timing doesn't matter. It may not matter to them but it certainly does to the client. It's what the managers of those funds are trying to get right every day.

It's true that the longer an investment is held the better the chances of mitigating bad timing. It's also true that if you badly timed and bought the Nikkei 21 years ago your investment would still be valued at just 25% of the cost. If you buy too high that additional cost will never be recovered no matter how long you hold and regardless of any profit you finally make.

The only tricky bit is actually getting it right.

SarahCL99

There is a brilliant book by James Montier about the psychology of investing - The Little Book of Behavioural Investing - which is a really good read.

He makes very simple points: people feel scared in bear markets and don't invest when things are bad - but that's the best time to invest and vice versa. Hence why most investors (including me) have tended to buy at the top, when all the marketing is around and everybody is confident. So the 2008-9 collapse was a once in perhaps 30 year chance to buy great assets at really low prices.

"A pack of lemmings looks like a group of rugged individualists compared with Wall Street when it gets a concept in its teeth", so says Warren Buffett.

DiggerUK

Why Geopulse hasn't been back for a while should alert anybody as to what Geopulse is up to.
A simple search and Geopulse comes on to the radar.

I really am getting to old for this. I think I will invest all my worldly wealth in silver, and enter a monastery.

kidmugsy

"do you think timing of buying the shares plays an important role too?" Even more, the timing of selling.

Geopulse

Thank you people, for your support!:)