Timing the Market is Risky – Put your Money To Work

timing the market
Timing the Market is Risky – Put your Money To Work

Thought I would update one of my original posts from way back in 2017. Market timing does it really work. Short and simple – if people knew how to time the market, there would be some extremely wealthy people out there doing this. We all know some story’s of people making it huge by timing the market, but those are extremely rare.

The Big Short in particular comes to mind when Michael Burry bet billions against the US housing bubble in the mid 2000’s and made a fortune. Great movie, but I certainly would of been stressed to the maxed in that position.

timing the market

Burry is currently calling for another stock market crash. He sold off most of his positions but actually started a position in other stocks. ie Lockheed Martin

One of my favourite authors has been going on about a crash for years now. Robert Kiyosaki. He’s saying nothing is safe this time. Stocks will crash, precious metals will crash, housing will crash etc etc and yet cash loses its purchasing power daily at a 7% inflation rate.

timing the market

A quick google shows how long he has been saying this. If you sold all your stocks or even real estate in September 2020, you missed one of the best years the market has ever had. Housing in Canada for sure! I would definitely be upset with myself for taking his advice, and I can guarantee you the wife would be even more upset. haha

Current Issues

I feel like 3-4 times a day someone on these facebook investing groups asks if they should sell or posts something about a possible crash. You can definitely see the feeling in the air change. Clearly growth stocks have been taking a step back but if we look at other industry’s they are booming *cough – financials, energy and commodity’s*

Its easy to look around and say wow things don’t look good. We got Russia about to invade Ukraine, China and Taiwan issues, covid, massive debts around the world, inflation numbers, trucking issues between Canada and the US and I’d say its safe to say a huge housing bubble in Canada.

But we also see the United Kingdom announcing next week they will end almost all covid protocols. Is this the start of Country’s opening things up around the world? If so this could be the start of a massive boom. I can say personally I can’t wait to go away again with the kids, go do more activity’s etc. Everyone is bottled up in their houses once again and dying to get back to normal. I wouldn’t want to be out of the market if this were to happen, we could have another good year once again.

At the same time, I think the market needs some kind of pullback. Its generally good for the market. And even better for us in the accumulation phase, cheaper Drips and who doesn’t like buying great company’s at an even lower price per share while getting a higher starting dividend yield.


History has showed us repetitively that time in the market has a better return than timing the market. Morningstar has a great article highlighting the markets history since 1925. It essentially proves the point of why you should stay invested. One highlight that stands out is how the longer you stay invested the risk of loss is lower.

  • Of the 94 one-year periods since 1926, 25 have resulted in a loss.
  • Of the 90 overlapping five-year periods since 1926, only 12 have resulted in a loss.
  • Of the 80 overlapping 15-year periods since 1926, none have resulted in a loss.

As a long term investor this chart/ breakdown speaks volumes. Embrace the dips, in the future you will probably look back and be happy you did.

Whats Your Plan?

I think personal finance comes down to your plan. Its messy in all regards if you don’t have a plan. You know when your mortgage payment is coming, you better pay it. You get that hydro bill, do you pay it instantly or put a note on an app to pay it the day its due. Either way both work but one is a lot simpler. Just pay that bill right away and toss it. Do you invest based on what money is left over at the end of the month? or do you take the pay yourself first approach.

We are in the process of refinancing our house and using that equity to max out some of our accounts. The market is near all time highs. Is it the ideal time to do this? who knows.. I will stick to the plan of dollar cost averaging weekly or bi weekly. Waiting for a pullback seems like a fools error. Would a 10% correction be enough to get people to lower their cash stockpile? A 10% pullback on the tsx would bring us back to approx May 2021. I’m sure there are people who have been waiting for a 10% pullback before than. Meanwhile cash continues to lose its purchasing power due to high inflation.

Make your plan and stick with it, history proves timing the market doesn’t work over a long time horizon.

Whats your thoughts. If you were to receive a lump sum of cash would you put it all to work right away or put it in weekly?

Wish you all the best, put that cash to work and let’s go collect them dividends!


8 Responses

  1. I do try to time the market from time to time, but it’s more about luck than skills. So to take full advantage of down turn opportunities I have my line of credit and margin in my account ready for action when the market does go down. This way, I am still fully invested in the market.

  2. MrSLM says:

    I’ve actually done some back-testing analysis to confirm people who keep a cash portion aside to “buy on dips” underperform. I’ll get around to posting it one day!

  3. Interesting post! I’ve personally learned not to time the market. That’s because I’m really bad at it. Instead, I advocate for dollar-cost averaging.

  4. Norm says:

    Hey Rob, I wasn’t a reader back in 2017 but glad to have joined. Putting cash to work is pretty much my #1 rule, and being efficient with the working cash is #2.

    For people with diversified assets I’ve always felt purposely sitting on cash is a waste of resources, especially since the current low interest rate environment started way back in 2002. Cash, or access to it, is easily acquired with diversified assets.

    No doubt a market crash is coming, but when will it happen? How much will the drop be? Will the crash last 5 years? What companies will go bankrupt? No one knows. Will people panic and realize losses? Will good deals be had? Yes. For those without assets or stable income having some cash is a great idea.

    If I landed a windfall right now (not a loan) half would be invested in individual stocks, 30% in physical real estate, 5% in crypto and 15% on some 18th century art! For your equity loan a little more conservative is a good idea.

    • Rob says:

      hey Norm

      Its been a long time of low interest thats for sure, will it eventually increase enough to beat down inflation. I dunno I wonder if rates go up but we sit in this lower interest environment 2-4%. Gonna be killer for the interest on govt debts but i guess they are paying it with cheaper debt right?

      I think there will be alot of panic and people realizing loses. There are just to many new investors these days who think they can make it rich quickly in the market. Red may scare people out. A 5 yr crash would be hard to swallow but great for accumulation. I just wrote hopefully this pullback in longer than the last corona one though, 5 years would be kinda crazy. but you never know

      surprised your in crypto. which ones do you own? Etherium seems interesting but i just cant wrap my head around it when govts will be making their own digital loonie why would they want this competition?
      Maybe ill get more physical bullion but i hate its cash flow! haha

      cheers Norm!

  5. Liquid says:

    I think market timing works if you are using the right data. But finding which set of data to use is the challenging part. My plan is to just buy the dip when the market is in correction territory. 🙂

  6. German says:

    Well, the days like today (Jan 24 ) was a good day to buy the dip 🙂

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