Okay, we all know (even though many of you have tried anyway) that jumping in and out of the stock market to avoid bad years and only participate in the good times doesn’t work. That’s not my hot take.
My big epiphany is WHY market timing doesn’t work. Here it is:
You are trying to outsmart something that isn’t smart.
That’s right: You are using logic (i.e. early 2025 “tariffs will probably have unintended – bad – consequences”) and applying it to an entity (the stock market) that doesn’t really think.
Did farmers, manufacturers, tech workers, and people trying to buy stuff all feel the pain of tariffs? You bet! Did the stock market in 2025 reflect that pain? Nope!
So, take heart, Smarties! The stock market isn’t smarter than you, it just behaves in ways that we cannot predict. Ways that maybe seem dumb at the time.
Also, remember, economic policies put in place by governments can sometimes take years or even decades to really show up as returns (positive or negative) on your investments.
So, we come back to it again: Smart people (not you, maybe your neighbor) doing dumb things (selling out of their investments to avoid losing money) trying to outwit an entity that isn’t doesn’t think (the stock market).
As Bob Newhart advised in his hilarious SNL skit about what therapists really want to say to their patients, “Stop it!”
That’s all our time today. I look forward to our next session.
