Many Happy Returns So You’ve Decided to Time the Market…
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Nov 5, 2025 The hosts dive into the allure of market timing and why it tempts investors despite the risks. They clarify the distinction between rebalancing and emotional market timing, offering rules to reduce panic. Practical insights on setting equity risk tolerance and indicators for timing are discussed, along with the complexities of predicting market crashes. The difference between corrections, bear markets, and crashes is unraveled, enhancing listeners' understanding of market dynamics. It's a mix of caution and strategy regarding investment decisions!
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High Valuations Don't Mean Immediate Crash
- Markets can stay irrationally expensive for long periods, so high valuations don't predict imminent crashes.
- Human herd behaviour and concentration in a few names often prolong rallies despite weak fundamentals.
Use Rules To Avoid Emotional Trading
- Use pre-written rebalancing rules to remove emotion from selling decisions.
- Rebalance when allocations deviate by set percentages or at fixed intervals rather than on fear.
Real Risk Tolerance Shows In A Crash
- Your true risk tolerance reveals itself during a crash, not on a questionnaire.
- Test tolerance by staying invested through a fall and then adjust your strategic allocation afterward.
