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That Timing Thing

The market can be timed, they say. What do they mean?

Taming Time: Ergo?

A lot of money is made on the stockmarket by 'timing' it. This means surfing the waves as the market goes up and down, to rake in the most moolah. The big guys do it all the time.

How do small guys do it? First, by identifying 'undervalued' stocks (details of which are to be found in BT's print edition dated November 21, 2003), and then buying these as soon as you spot a stockmarket 'trigger'-- some event that sends the index skyward. Just as the market reaches its peak, you sell.

Simple enough?

Of course not. A trigger, for example, is some piece of news, typically, and working out what sends traders into frenzy takes some experience (not to mention a sharp feel for relevant information). The trick sometimes is to tune into the discourse that goes beyond the obvious (for if the obvious were to make you millions, everyone would be a millionaire).

Tracking trends for bullish and bearish sentiment is another habit you must pick up (moving averages are highly recommended, by the way). The trickiest part, as ever, is to judge an exit decision finely. And on this, you must trust only yourself (since it is in everybody else's interest to have you hold the can once they flee).

Should you trust what you're reading here? No, not in any absolute sense. The media comprises a lot of people who aren't exactly infallible. But it would be nice if you consider it an input for your own calculations.

Timing the market is a precision thing. And it pays, sometimes, to be discerning of hair-splitting differences. The trouble, most often, is that people cannot tell the difference between an optimism probability (on a scale of 0 to 1) of 0.45 and 0.55. To the approximation-happy, they're both about 'half'. But actually, 0.45 is closer to 0 and 0.55 is closer to 1.

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