- The Newsletter
- Meet George
- Investment Advice
- Member Features & Benefits
- Current Letter
- Our Portfolio
- Expanded Stock Pick Analysis
- Closed Out Recommendations
- Previous Letters & Search
- Turnaround Investing Reports
- Purchase Recommendation Updates
- Bankruptcy Securities Pricing
- Distressed Investing Blog
Don’t Try and Time the Market
There is an old saying in the investment business: “You can always tell the market-timers: they’re the ones with the holes in their shoes.” While there may be cycles in the stock market, The Turnaround Letter doesn’t know anyone who can successfully time those cycles, so our stock advice for turnaround investors is not to attempt market timing.
Consistently profitable market timing requires two different sets of very challenging decisions: when to pull out of the market and when to get back in—and it is nearly impossible to get both decisions right. We know people who are still bragging that they pulled out of stocks just before the big stock market crash in October 1987. Unfortunately, once out of the market, they’ve never been able to pull the trigger to get back in. As a result, they’ve missed the more than fourfold gain in the S&P 500 since the 1987 market high.
We also know investors who worried about being left behind when the stock market was hitting new highs in the summer of 1987, and they bought stocks like crazy. Then, when the market crashed in October, they panicked and sold everything—locking in big losses. Those same people probably repeated this pattern in 2000 and 2008.
Both groups would have been better served resisting their impulses and staying the course with a reasonable long term investing strategy. The Turnaround Letter always recommends that investors put as much money into stocks as will still allow them to sleep at night—then keep that allocation pretty constant in both good times and bad.