The investor can scarcely take seriously the innumerable predictions which appear almost daily and are his for the asking.
Yet in many cases he pays attention to them and even acts on them. Why?
Because he has been persuaded that it is important for him to form some opinion of the future course of the stock market, and because he feels that the brokerage or service forecast is at least more dependable than his own.
This attitude will bring the typical investor nothing but regrets.
Without realizing it, he is likely to find himself transformed into a market trader.
During a sustained bull movement, when it is easy to make money by simply swimming with the speculative tide, he will gradually lose interest in the quality and the value of the securities he is buying and become more and more engrossed in the fascinating game of beating the market.
But "beating the market" really means beating himself - for he and his fellows constitute the market.
Thus he begins by studying market movements as a "commonsense investment precaution" or a "desirable supplement to his study of security values"; he ends as a stock-market speculator, indistinguishable from all the rest.
A great deal of brain power goes into this field, and undoubtedly, some people can make money by being good stock-market analysts.
But it is absurd to think that the general public can ever make money out of market forecasts.
For who will buy when the general public, at a given signal, rushes to sell out at a profit?
If you, the reader, expect to get rich over the years by following some system or leadership in market forecasting, you must be expecting:
(a) to try to do what countless others are aiming at and
(b) to be able to do it better than your numerous competitors in the market.
There is no basis either in logic or in experience for assuming that any typical or average investor can anticipate market movements more successfully that the general public, of which he is himself a part.
$$$$$$$$$$
Timing is of great psychological importance to the speculator because he wants to make his profit in a hurry.
The idea of waiting a year before his stock moves up is repugnant to him.
But a waiting period, as such, is of no consequence to the investor.
What advantage is there to him in having his money un-invested until he receives some (presumably) trustworthy signal that the time has come to buy?
He enjoys an advantage only if by waiting he succeeds in buying later at a sufficiently lower price to offset his loss of dividend income.
What this means is that timing is of no real value to the investor unless it coincides with pricing - that is, unless it enables him to repurchase his shares at substantially under his previous selling price.
Benjamin Graham
Intelligent Investor
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Discussions
1 person likes this. Showing 13 of 13 comments
Timing is a very important task to foreign funds. When economy is foreseen not doing well in near future, they are the first running away. You see the facts.. FF are fleeing Bursa like no tomorrow since Sept 2014.
2015-01-19 19:50
Foreign funds has disposed RM 2 billion worth of shares since 2 Jan 15. Will FF continue to exit local market? kikiki
2015-01-19 19:57
Not all FF have sold and left.
Aberdeen, Goldman sachs, Credit Suisse & others are still here.
Funds Fled India In droves not too long ago. The Foreign Sentiment was horrifying. As if India was finished. Yet when prices turned attractive these same FF rush as one like crazy back to India.
And now they say India will be a Big Growth Story.
FF often say one thing and do another.
During the Asian Financial Crisis IMF told Malaysia to tighten money supply.
When US went into Subprime Trouble They Increased Money Supply by QE 1 , QE 2 & QE 3
It was Barton Briggs who exclaimed in HK that HE WAS MAXIMUM BULLISH ON HK & CHINA SHARES. Yet 8 days later he totally Sold Off All HK Shares.
2015-01-19 21:19
Don't time the Market.
But Watch Intrinsic Value.
A security should be bought far below intrinsic value. And it should certainly be Sold Off when it rises ABOVE Intrinsic Value.
This is the only safe and sure way to profit.
2015-01-19 21:22
I believe in doing sufficient homework to back our decision on the timing of market.
FF bought more than RM 20 billion worth of shares during the bull run between 2010 to 2012. It's very reasonable for them to pocket profit now. I am just a small potato and I can enter and exit market easily. I don't want to be part of the hero team to support the market during downturn. Let's see what would happen to the market in the next 6 months. Wakaka.
2015-01-19 22:00
SOP2. I believe in market cycle of the economy. It's worthwhile to time the market by taking advantage short term fluctuation in market prices. After going through bull and bear market since 1997, I respect the cycle and it's part of our life. I want to be more proactive in response to the cycle.
2015-01-19 23:29
Short life rebound of the big cap ie Maybank, Genting, PBB. The main support is relying on Tenaga. It provides a golden opportunity for FF to take profit. Malaysia has nothing to shout about at this time. There's no better reason for FF keeps staying in Bursa this year.
2015-01-19 23:36
Trap those people enjoy playing rebound game and don't know when to cut loss. It's hard to get rid of gambling.
2015-01-19 23:48
If I am not mistaken, EPF and Amanah have pumped in more than RM 3 billion in local KLCI index counters since Nov 2014. Many companies will announce their lacklustre earnings next month. Let's see how our local funds defend the selling pressure from FF.
2015-01-19 23:57
FF has disposed RM 7.2 billion of equities since Sept 2014 and KLCI dropped 140 points. FF purchased equities worth RM 33.8 billion from 2010 to 2013. They got plenty of funds to dump the market. I want to see how FF would crush the confidence of the market in coming months.
2015-01-20 00:27
Market timers & speculators fear not only bullish trend reversal, they also fear bearish trend reversal too! In other words, they are anxious no matter which ever trajectory market is at. Contrast that to lonng term investors who ride out all the volatility by staying investted in quality/value/growth stocks at all times instead of trying to outsmarting mart cycles. Maybe the lack of stress in this method of investing is one of the reasons why many billionaire stock investors, works way pass their 80's!
2015-01-20 10:43
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CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Kevin Wong
Market forecasting/timing, won't work over the long term...can't rely on luck for long when it comes to investing!
2015-01-19 19:30