Time in the Market (or) Timing the Market?
Sriram Balasubramanian (Sriram Balu)
Head of Sales & Strategy - Maritime | Building "ONE" | Building "Prime ETF"
The Golden Strategy: Time in the Market vs. Timing the Market
Are you team "Time in the Market" or do you swear by "Timing the Market"? Both camps have merits, and there's no one-size-fits-all answer, especially when it comes to investing in gold.
Let's break it down with a straightforward example: gold investments, specifically through the IAU ETF.
Some investors hesitate to invest in gold, pointing out its lacklustre long-term performance compared to the S&P 500.
But, is that the whole story?
Not quite.
It all boils down to the timeframe you're looking at.
Honestly, who's got the patience to hold onto gold for 30 or 50 years?
Enter the "lazy portfolio" approach, where experts might allocate about 10% of their portfolio to gold or opt for a diversified commodities ETF. This isn't a mistake. It's a strategy for those who prefer not to—or simply can't—time the market, opting instead for a broad mix of assets.
On the flip side, there are investors who swear by tactical asset allocation. They adjust their investment based on current market conditions and trends.
Why do I love this approach?
It's all about putting your money where it has the potential to work hardest, based on current conditions.
It's not about claiming one strategy is superior; it's about recognising the value of disciplined investing or trading, regardless of the approach.
Looking at gold from a strategic asset allocation viewpoint, you might have parked 10% of your investment in gold and seen minimal returns (in USD terms) for years. But that's exactly the point for strategic investors—they use gold as a safety net against market downturns, embracing the slow periods as part of their plan.
However, if you lean towards tactical asset allocation, you might find gold especially appealing right now. After years of moving sideways, gold has recently broken out, showing significant momentum in both the short and mid-term. This could be a golden opportunity (pun intended) for tactical investors to shine.
In the end, whether you prefer to spend time in the market or to time your entry and exit, the real power lies in sticking to your chosen strategy. Deviating from your plan is where the real risk lies.
I'd love to hear your thoughts and learn from your experiences. What's your take on investing in gold?
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Disclaimer:
?? Not a stock buy/sell recommendation
?? I am not an expert
?? Only for education purposes
?? Trade at your own Risk
?? In Conclusion ??
In the world of stocks, what matters most is not the maze of patterns but the engaging story behind a stock and the trends it follows. Avoid analysis paralysis and follow the narratives or trends – this is where the real opportunities lie.
I trust this insight has added value to your investing journey. I'm keen to hear your thoughts!
Once more, in keeping with my usual practice, I acknowledge the possibility of errors in my observations and leave room for constructive feedback and correction in my thinking.
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Administrative Law Judge at Department of Inspections, Appeals & Licensing
7 个月Time in the market. My timing has never been pinpoint but over the course of 18 months to three years I'm pretty solid 20% return.