Timing is Everything
I do believe that timing plays an important part in our daily lives. That can work both ways unfortunately and sometimes it’s also luck or fate as well.
Since life is such a crapshoot, why would I think timing is a key element to success or failure? Simple. We are all given opportunities to do things. Invest in something. Take a new job. Meet a new partner. Every day we make choices and timing plays a key role in those choices.
The key to success is not only hard work, intelligence and fortitude. It is timing. Making the decision to pull the trigger when that unique opportunity presents itself. I am a firm believer in taking advantage of timing to create success.
The windows of opportunity are only open for short periods of time and being able to go through those windows and achieving a successful outcome takes confidence. You have to believe that the decision to take advantage of that moment in time is the right course of action. Not a lot of people can do that, that is why there are millions of missed opportunities in life. You didn’t believe your decision would be the right one. You were unwilling to act on instinct.
Instinct is something I believe we all have but we just don’t have faith in it. Honing that instinct is not easy and leads to lots of failures before you get it right. Most people give up on relying on instinct and their gut. They become pragmatic and at times, very indecisive, which leads to missed chances. I am not sure if that conservative approach becomes more prevalent as we get older but experience leads to less risky choices so I’m assuming we discard our instincts and end up using experience and common sense.
Where does all this play into our present economic conditions you ask. Simple. What we have seen over the last few days is a market of timers. People who think timing the moves of the market is an effective and successful investing strategy. I can tell you from the get go it is not a successful trading strategy. You may get it right once, maybe twice, but over the course of your investing career, you will be wrong way more than you will be right.
Timing market moves is next to impossible under normal circumstances and it becomes a fools’ game during times such as these. Watching a market tank 800 pts on the Dow in the first hours of trading and then turn around with such force that it defies logic is a perfect example of timing a market. Waiting for that bottom to appear and then buying at that bottom is a dangerous game. Who says that bottom was 12:12 pm EST? How do you know? You could have just as easily bought when the market opened and then sold at the bottom because you were down 1 1/2% in the span of two hours.
What I find interesting is all of these “market timers” show up on Reddit or other social media and brag about “timing” the bottom. I call BS to pretty much everyone of these “gurus” and challenge to actually trade that way for the rest of the year. Their P&L (Purchases and Loss summary) will look worse than they claim for sure.
The point is, with these wild swings due to geopolitical events might be that perfect spot for market timers, it is not an effective strategy long term and while the temptation is there, refrain.
With all this being said, there actually is a place for timing as far as investing is concerned and it’s a longer term approach. The timing I am talking about is not contingent on price alone. It has to do with a fundamental approach as well.
For example, if you have an interest in a certain technology and a company that you have heard about that is at the forefront of that technology has decided to go public, you can invest in that company. You are timing your purchase to take advantage of that company’s potential success in the months and years ahead. You are using fundamentals to make your decision and your timing is based on an IPO. Should the IPO not work out as planned, you might want to time your purchase in relation to the stock price but it is more about investing in the company. You are looking at the future and while the timing and the price may play a role, it is the future of that company that is important.
That is investing. While your instincts will play a minimal role in that, timing may be a part of the equation but only in a limited way as well. It is about fundamentals.
That is how I like to invest. Fundamentals first. Technicals (for entry and exit) second. When you read this column it is a mixture of both. I generally don’t go into those deep discussions about factors I believe are important in investing, too often those explanations cause the reader to get glassy-eyed and they won’t finish the article. I like to keep it concise and simple and if anyone wants me to give a dissertation on why I believe something, all they have to do is ask. Remember, I operate under K.I.S.S.
To understand what has been happening in the equity markets over the last few days is challenging. You have a geopolitical event that we haven’t seen since the mid 40’s and the response, Worldwide, has been of an economic nature as opposed to a military nature and that, while not totally unique, has profound impacts on the Worlds markets.
The World’s expectation was that Russia was going to roll over the Ukraine and this would take a week or so. I was one of those that thought this might resemble Nazi Germany’s waltz through Poland. However, it hasn’t played out that way and the Ukrainian people have been every bit of a match to the vaunted Russian military. It may still end up being a disaster for Ukraine but for every day they prevent the Russians from moving into Kyiv, it is another day of Western arms flowing into Ukraine and another day of devastating sanctions against Vladimir Putin. The ultimate undoing of Putin’s reign will not be played out on the battlefield, it will be in the boardroom so to speak. One of the things that the media has failed to play out is the simplest to understand. The Russian currency, the Rouble, is being devalued as we speak and this is where things will fall apart quickly. The Russian military will only fight for so long if their pay continues to devalue as they march towards the Capital. The families of these soldiers will be suffering terribly as well and the limited support he has at home will completely evaporate.
The oligarchs will turn against him. The military will turn against him. The people will turn against him. And oh yeah, while he thought that NATO would be divided on this issue, apparently it has become stronger and what about Finland (along with Sweden) and its 850 mile border with Russia, wanting to join NATO as well?
Seems like Putin has misjudged many things and the final straw will be his putting their nuclear component on standby. The military has to see that this is a dangerous game he is playing and if that escalates with no provocation, no one will win.
I may be the only person to say this but I believe that Vladimir Putin will not be able to survive this invasion if some sort of diplomatic solution isn’t reached. He won’t give up his hatred for the West and that makes him a very dangerous man but I do think that he will be removed before he can do anymore damage.
What about the Chinese, you wonder? The Chinese have not fallen on either side of anything here and with good reason. They want to see who cracks and where weakness is shown and they will work that angle for all it’s worth. It the west flubs it and Russia does what it want’s to do, China will weigh the risks and then decide on what to do about Taiwan and Tibet. The Chinese will always play the long game and I think they understand that maybe the long game doesn’t include Moscow.