Wednesday 8 July 2020

Time in Market Beats Timing the Market

BeatTheBush is a YouTuber who sold all his stocks holdings as he was expecting another stock market crash and he will buy back when they have gone down.

After he sold the stocks, the market shot up and recovered rapidly. With that, he lost about $20,000 in gains and then reported also that he could have had $40,000.

With Tesla hitting $1000 a few days ago, the gains were enormous as the market recovers in a crazy amount of time.

He also mentions in his latest video that he FOMO hard on TSLA, as he bought 100 shares of Tesla when it was about $200 and sold it when it was about $800. He says that if he held on to that, he would have earned an extra $14,000.

He sold off all his holdings thinking that a stock market crash will be coming soon due to the situation but instead to his horror, stocks went even higher and now for him to enter the market again means buying back his positions at a higher price.
"Time in the market beats timing the market"
This is a really famous quote and many people agree with it. It sounds really easy but to stay in the market especially when your portfolio has a huge profit or when the market looks like it is about to crash is difficult.

Why time in the market beats timing the market because firstly, you save on transaction fees, to sell and purchase the stocks again with guarantee that you can get it at the original price you pay is a risk. The transaction fees can really add up especially if you have different stocks in your portfolio.

Secondly, the stock will usually go up over time especially over a long period of time like 10 years. This is because items and goods will generally increase in prices and consumer will then spend more hence in a way due to inflation, innovation and population growth. the stock will generally go up. Of course, you can never be so sure as there is always uncertainty and past result does not guarantee that the future will also follow.

Lastly, a lot of effort is needed to time the market, no one can really absolutely catch the bottom,maybe once or twice but it is impossible to catch it every single time. Staying invested means that you are confident that the company you are invested in will survive and grow in the years to come. To be selling and buying requires effort as daily news can bring about fluctuation in prices and monitoring them can be tedious. 

Of course, if a terget price for a certain company that you set has been reached, you can consider selling it to take profits as the profits will not materialized until you sell your stocks. We all learn along the way and there definitely is no hard and fast rule but just when to cut loss or take profit.


  1. The only time I totally sell off a stock is when I think that some major long-term fundamental has changed.

    Otherwise even if it chionged 100+% over 6 months, I will just trim the position size. Having a rebalancing plan is important.

    Anyway most of my stocks are large cap dividend growers, so unlikely to chiong 100% in a few months. 30% a year in some years, yes. Then I'll do rebalancing & trimming.

    Remember that selling off entire positions not only incurs big commission costs, but also results in big cash positions that now you have headache to redeploy & again incurring big commission charges.

    1. Yes, thanks for sharing some of your strategies and thoughts. Large cash position can be tough to re-deploy out as the large amount will make you extra cautious and prices could be higher than when you first went in.