When Is The Best Time To Invest?

Source: Getty Images

Timing the Markets

Looking at the long-term seasonality chart of the S&P 500 Stock Index below, below are some of our observations and reflections on investing in general with respect to expectations and timing.

Source: Bloomberg, Author’s Calculations (as of 21 July 2021)

(1) Expect the market to be volatile.

It is clear that within any given year, the stock market tends to be very volatile. There are fairly large price movements, up and down either way throughout the year. But generally, the down moves tend to be faster and sharper than the up moves.

(2) Know the market tends to go up on average.

The stock market tends to go up over the long-run, and returns on average about 6% p.a. over the long-run.

(3) Know that there are good and bad months.

Apparently there are some seemingly seasonal monthly trends in the stock market (e.g. January effect, Summer effect), where for some months during the year, it tends to either (1) go up, (2) go down and (3) go sideways, but our intention is not to discuss that.

Source: Bloomberg, Author’s Calculations (as of 21 July 2021)

(4) Do not be a fool to time the markets.

Trying to perfectly time the market to buy and sell is extremely difficult to do. Till date, we are not aware of any trader/investor that manages to perfectly time all of their buys and sells at the low and highs respectively, consistently every time for a long time.

Source: JPMorgan Asset Management Guide to the Markets

Parting Thoughts…

With that I would like to end with a quote:

Source: YCharts, Author’s Calculations (143Aug2021)

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Eugene Ng

Eugene Ng

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Author | Investor | Founder & CIO Vision Capital | Investing in businesses that reflect our best vision for our future