Successful Market Timer

[robo]

Do you have what it takes to be a successful market timer?


Written by Paul Merriman
Sunday, 29 June 1997

EDITOR'S NOTE: This article was first published in 1994 in Paul Merriman's "Fund Exchange" newsletter, the predecessor to FundAdvice.com. We have kept it on this site all this time because its message is just as timely now as it was then.



Market timing works, and it works well for people who actually practice it as a discipline. In theory, every investor is capable of following the disciplines of timing. But not everybody has the right emotional makeup to do timing right. In real life, most people who try are ultimately unsuccessful. Timing puts investors on the front lines, face to face with the realities of the market, every business day. To be a successful timer, you’ve got to buy and sell without flinching even when you don’t feel like it. You’ve got to follow your discipline even when you’re sure it’s a mistake. You’ve got to do it even when you don’t understand why your timing system is telling you to act. Nike had it right: "Just do it." But it’s so much easier to say than do!


This month I’m going to share with you a list of 10 keys to being a successful market timer. And I’ll tell you some uncomfortable truths about timing, what it’s really like when it’s not fun. But even the best tips in the world won’t be of any value to you unless you put them into practice. And no matter what you think, you probably won’t do that unless you have the right emotional temperament to be a timer.


Timing is not for sissies. Sometimes it takes strong faith and a strong stomach. I like this quote from the legendary Benjamin Graham: "To achieve satisfactory results is easier than most people realize. To achieve superior results is harder than it looks."


Here are six questions to help you determine if you have what it takes. (Long-time Fund Exchange readers may recognize this topic from an issue we published five years ago.) There are no right or wrong answers, only what’s true for you.


Six questions


http://www.fundadvice.com/fehtml/mtstrategies/9803.html

 

[Tempest]

Market Timing threads are like oil threads in motorcycle forms (synthetic vs 'dino').


Just saying.

 

[Birchtree]

Reading that was like looking in the mirror - 19 sales and 522 buys this year. And I might not be done yet.

 

[james_smith]

I don't know of any successful long-term market timers. Market timing is based on predicting the future. You might do it well for a bit by luck. But long term?

 

[Birchtree]

Well you are correct so there will be no T-shirt for you. Welcome to the board.

 

[tsptalk]

Well you are correct so there will be no T-shirt for you. Welcome to the board.

Birch - You probably can't afford a shirt right now, so I'll see if I can get Trader Fred to flip the bill for you. He's down just 2.6% this year. I'd love to see one of those shirts on your back. What size do you wear?

After many years of trying, I finally converted my wife to the elephant side. It should be easier to convert you into a timer.

P.S. Some of Fred's long and short-term trading accounts are up big trading ETF's from the both long and [selling] short side...

 

[Frixxxx]

Birch - You probably can't afford a shirt right now, so I'll see if I can get Trader Fred to flip the bill for you. He's down just 2.6% this year. I'd love to see one of those shirts on your back. What size do you wear?

After many years of trying, I finally converted my wife to the elephant side. It should be easier to convert you into a timer.

Um, can I watch your attempts at this? I never seen waterboarding up close?:laugh:

 

[Show-me]

Waterboarding Birch into a timer...................... are we selling tickets to this?:nuts::laugh:

 

[Silverbird]

Be nice, Gentlemen...be nice. I can get hyperbole anytime by actually listening to my answering machine messages.

 

[TRAFFIC_DOG]

Do you have what it takes to be a successful market timer?


Written by Paul Merriman
Sunday, 29 June 1997

EDITOR'S NOTE: This article was first published in 1994 in Paul Merriman's "Fund Exchange" newsletter, the predecessor to FundAdvice.com. We have kept it on this site all this time because its message is just as timely now as it was then.



Market timing works, and it works well for people who actually practice it as a discipline. In theory, every investor is capable of following the disciplines of timing. But not everybody has the right emotional makeup to do timing right. In real life, most people who try are ultimately unsuccessful. Timing puts investors on the front lines, face to face with the realities of the market, every business day. To be a successful timer, you’ve got to buy and sell without flinching even when you don’t feel like it. You’ve got to follow your discipline even when you’re sure it’s a mistake.

This Is so very, very true.

You’ve got to do it even when you don’t understand why your timing system is telling you to act.

This statement is the root cause of recurring failure of even the "successful" market timers, most of which have static/technical models.

I don't think you should ever be involved with a system which gives you signals that you don't understand. This is different than following your discipline when you're sure it's a mistake. An example is when you just KNOW the market will go down, but you don't sell all, instead leaving some in as insurance that you really are sure you don't need.

Timing is not for sissies. Sometimes it takes strong faith and a strong stomach. I like this quote from the legendary Benjamin Graham: "To achieve satisfactory results is easier than most people realize. To achieve superior results is harder than it looks."

The above sentence in bold is THE most important statement to understand.

This market underscores it perfectly.

Satisfactory results is some level of outperformance of the funds.

Superior results would be trying to avoid all losses.This is a set up for failure in the long haul. Too much luck would be involved and not recognized. This will insure underperformance in the future.


GL

 

[ATCJeff]

Waterboarding Birch into a timer...................... are we selling tickets to this?:nuts::laugh:

yes and proceeds go to Birch to help him pay his winter heating bills.

 

[coolhand]

Do you have what it takes to be a successful market timer?


Written by Paul Merriman
Sunday, 29 June 1997

EDITOR'S NOTE: This article was first published in 1994 in Paul Merriman's "Fund Exchange" newsletter, the predecessor to FundAdvice.com. We have kept it on this site all this time because its message is just as timely now as it was then.



Market timing works, and it works well for people who actually practice it as a discipline. In theory, every investor is capable of following the disciplines of timing. But not everybody has the right emotional makeup to do timing right. In real life, most people who try are ultimately unsuccessful. Timing puts investors on the front lines, face to face with the realities of the market, every business day. To be a successful timer, you’ve got to buy and sell without flinching even when you don’t feel like it. You’ve got to follow your discipline even when you’re sure it’s a mistake. You’ve got to do it even when you don’t understand why your timing system is telling you to act. Nike had it right: "Just do it." But it’s so much easier to say than do!


This month I’m going to share with you a list of 10 keys to being a successful market timer. And I’ll tell you some uncomfortable truths about timing, what it’s really like when it’s not fun. But even the best tips in the world won’t be of any value to you unless you put them into practice. And no matter what you think, you probably won’t do that unless you have the right emotional temperament to be a timer.


Timing is not for sissies. Sometimes it takes strong faith and a strong stomach. I like this quote from the legendary Benjamin Graham: "To achieve satisfactory results is easier than most people realize. To achieve superior results is harder than it looks."


Here are six questions to help you determine if you have what it takes. (Long-time Fund Exchange readers may recognize this topic from an issue we published five years ago.) There are no right or wrong answers, only what’s true for you.


Six questions


http://www.fundadvice.com/fehtml/mtstrategies/9803.html

This is an excellent article. Emotional trading is usually devastating to one's account balance. A trader has to have some kind of trading system in place and it helps even more if one understands it. With understanding comes confidence in execution. A good timer does not flinch if he/she ends up on the wrong side of the trade. It will happen. More often than one might like too.

A good timer has to have emotional balance at all times and recognizes that being wrong only requires an adjustment. Emotion is the #1 enemy of every trader.

As ugly as this market has been the last couple of months it has only been a couple of months! Perspective must be maintained at all times.