| | | Everyone times the market, even Buffett. But we use different techniques that match our skills and psych profile. For Buffett, timing is a matter assessing the valuations. For a high frequency quant trader, it is a matter of correlation with various factors and arbitrage.
To succeed, you need to find a timeframe that matches your specific skillset and risk tolerance. This is why one of the reasons why most people are advised to be long term investors. If your timeframe is 20 - 30 years, you don't need much in the way of trading skills.
I often make the analogy to sports. Baseball, golf, and boxing are all sports. But being a sportsman in one doesn't make one any good in another. Investing is similar. Momentum, derivatives, value investing, etc are all different and require different skills. I've tried being like Buffett or Peter Lynch and I suck at it. My sports are alpine skiing and hang gliding. Skiing = fast volatile trades, and hang gliding = being in tune with the environment and having a big picture view. I do the same with my investments and trades.
BTW, not to be bragging, but I was looking at my holdings last night. I have 60 positions and only 6 or 7 show losses. Net of all trades, I'm up 13% for the month for my whole account. This is so even though most of the times I've been 80% cash. But I would not recommend to anyone else to trade/invest like me anymore than I'd tell a random stranger to come off course skiing with me in the Alps doing double black diamonds. |
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