Are you seriously asking why market timing is a bad strategy?
No, I am not an advocate of market timing in its prevalant meaning. What I am asking about is a strategy for setting conditions to exit the position. I heard a lot of people calling the bottom at 25, 21, 17, 15, 12, 9 and so on. To me holding on to the position based on the hope that it will not go any lower is as much market timing as shorting a rising stock because "the top is reached" or trying to bottom fish a falling stock. I've also heard a lot of talk since last quarter on how TDFX will not be performing until the new year. Well if one really believes that, why should he hold on to it all along?
I have learned that the most important thing in the stock market is to flexiblity. You must set expectations of the future for the fundamentals and the stock performance. When those expectations are not met, then you must admit that you were wrong and get out of the position. This is simply an issue of money and risk management, not market timing.
Sun Tzu |
