Does Market Timing Ever Work in Canada?

When you're dealing with something because you think about the market, you really don't have much control over what's going to go on there. Even if you're working for a good company. It's not just what they do that influences stock prices. It's a lot of other influences in the world.

Hi, today I just wanted to speak about something a little bit different. And it's really a question that I've asked myself and other people have asked, does timing the market ever work? I'm talking about the stock market. And the answer to that, the short answer is yes, it can. But the reality is for most of us, it won't. Hi, my name's Dan. And when you think about what is timing the market? Well, it's selling a stock when it's relatively high, you own the stock and you say, okay, I think it's a, it's at a really nice point, price point right now. So you get out and then you wait for that stock price to drop and you get back in. That's timing the market. And some people, I'm talking about investors, you and you know, like you and I, you know, some people think they can do that successfully, but the reality is most of us can't because we don't have an edge or an advantage. So when you think of what's happening in the stock markets these days, what is it? Who's got the edge? Well, your high frequency traders have an edge. They're faster than you and way faster. And they have a clear advantage and they exploit that on a daily basis. Then you think about some of the pros. They have these super computers and they've analyzed data. They've got, you know, they just got processes built to help them trigger, you know, a buy or trigger a sell. And that's what you're competing against. So yes, there is people, and you may be one, or you may know someone who was, who was successful in, you know, timing a stock and getting out at the right time and getting back in and yeah, good, good for them. But the reality is if you want to do this consistently and you're not a pro, or you don't have some other edge and you're probably likely not going to be successful all the time. Quite often you will probably fail. And I know you've all heard it over time. You know, the best thing is if you're, you know, find a good stock, like, do your research, get to know a good stock and then buy it and hold it, don't be jumping in and out trying to time the market. And I've read the articles where they say if you use that approach, you will typically come out ahead over someone who's trying to time it. So that's just a reality that I wanted to share with you. And I thought one other thing that I would do today is just to talk about, you know, some of the information I've seen. Why don't I look at some of the information that, you know, I think we all know that Warren Buffett's been really successful in the market. So I thought I'd go and. And take a look at some of what he had to say about, you know, the stock market. So I'm just going to do a bit of a share and we're going to take a quick look at some of what the quotes that I found that he has. So this is just a great one. You know, when you just look at it and you understand that, you know, he just says that, you know, if you're going to do this and you're watching the market closely, you know, you. And you just get that anxiety, you're going, maybe, you know, maybe I should sell, maybe I should buy. It's not likely. That's what he says, that you're going to have a good result. So it's, you know, it happens. Market volatility happens. And I just like, you know, this one, which I thought was very interesting, and this is something he said to the shareholders at, you know, Berkshire Hathaway, and it was like, no one can tell you when these will happen. And he's talking about the volatility or these big declines. The light can go from green to red without ever passing yellow. So that's how quick it can happen. So if you're trying to time stuff, just be aware that you're putting yourself at risk, that, yeah, there can be a quick change. And, you know, it's just. It can happen so quickly that it may really catch you in a bad position.

Next one, which is, I think one of my favorite quotes at Warren is like, is, number one rule, never lose money. And the second rule, never forget rule number one. I just think that's a very great and good thing for us to think about if we're thinking about time in the market. It's like, you better take the time and have the time to do your research on what stocks you're buying and why you're buying them. And then, you know, go into it with your eyes open, realize that if you're trying to time it, who you're Competing against. So maybe, you know, if you're a pro or you're a high frequency trader and you've got the edge on someone else, that's different than I'm, you know, what I'm talking about, which is, you know, you and I are, you know, typical average investor investing in the stock market. That's kind of some of the stuff we're up against. And the other thing I thought I'd tell you about is a little story that give me some insight into how the market can change things for you. This is really not a true timing kind of example, but it's a true example that I lived in my life and in my previous career. I worked for, you know, a very good company and we traded on, you know, the tsx, we traded on the New York Stock Exchange. And I was able to enjoy some really good years working for that company. Another thing I got to enjoy was I got stock options. Over time, they would issue me off options and you know, they typically have like a three year period before I could exercise them. So they'd give me a strike price and that's what they offered me the options at. And after three years, you know, I could exercise. And I usually had seven years that I could exercise before those options were, you know, basically dropped off, no longer had them. And I was, you know, working there. And it was a great company. Our stock, you know, value kept on going up and it was, you know, I had some really good success with selling my options and making a nice capital gain. And yeah, that was great because, hey, it was paid capital gains tax, so that was a lot better. Right. I was only really taxed on half of it. So it was really a good outcome for me. And one day when I was talking to one of the executives in the company and he said to me, he says, well, my advice to you, and I had a lot of respect for this person because he had done well, is that with my sock options. He says I hold him as long as I can right up until, you know, that seventh year. And that's always worked out good for me. So the next time one of my options became exercisable, you know, I always set a price, a strike price that I wanted to exercise it at. And I got to that price and I got thinking, yeah, I'm just gonna wait because, yeah, I look back and that was the history. Yeah, if I'd have waited on some of my previous ones, I'd have done better. So I'm gonna wait this time. Well, that was in the LATTER Part of 2007, if you remember what happened in 2007, 2008, with that nice little stock correction that hit and really, you know, messed with the markets for a long time. Well, I went from where I could have exercised, made a really nice profit to, you know, where they fell below the offer price. So if I would have exercised them at that point, I'd had to take money out of pocket to pay for those options over and above what they were valued at. So I chose not to for a few reasons. I wasn't sure how long we were going to be in this downturn, and I worked for that company. I knew it well and I knew that there was a few little issues that were starting to build that, you know, maybe our growth rate wouldn't be as good as it was in the past. So anyhow, make a long story short, I never exercised those options and I lost an opportunity. I was trying to time the market in a different way. That's what happens when you're dealing with something because you think about the market, you really don't have much control over what's going to go on there. Even if you're working for a good company, it's not just what they do that influences stock prices. It's a lot of other influences in the world. So what I say to you, if you're wondering, does market timing ever work? Well, yeah, it can. Some people have been able to do it, but for most of us it won't. So that's kind of my little thought that I wanted to share with you today on it and just based on experiences and some of the, you know, the reading I've done. And, you know, as Canadians, we're always looking for ways to get ahead. And I just always like to make sure whatever I do, and I'm going to ask you to do the same, whatever you're doing is you take the time to understand what it is, what risks you're taking and just, you know, be comfortable with that risk. And the market, you know, I think my just again, this is just my thought. When I think about stock markets now, they become less and less something that an average investor is going to have great success in because there's just so much outside of your control when you're in the market. So what I'd like you to, you know, encourage you to do just as I wrap up here is like, we've got lots of great videos on our channel, and yeah, most of them aren't related to stock market. They're related to what we teach at Ascended Financial, which is, you know, the infinite banking concept and for Canadians, and you know, that's what most of them be about. But we do offer different insights, just thoughts on things like, you know, can timing the market ever work? And the other thing, if you have any interest in just what we teach or do, I'm just going to encourage you to click on that link that you see, which is titled watch ib ibc.com that's watchibc.com and that's just a great training video that will help you understand about the infinite banking concept here in Canada. Anyhow, if you're in the market, I'm going to wish you well. Take care.