Cocktail Economics: Discovering Investment Truths from Everyday Conversations

Chapter 12. Making Hay While the Sun Shines: The Case for Predicting, Forecasting, and Timing

In investment circles, the word timing, or more the phrase “market timing,” carries a lot of baggage. Generally, market timing is the practice of timing the purchase or sale of assets to predicted swings in the market. The idea has been defined as “buy low, sell high” and further can be described as purchasing assets that are deemed undervalued currently and are forecasted to increase in value. This latter description is closer to what concerns this book: Instead of attempting the more timing-dependent and very active strategy of buying individual stocks low to sell them later at a higher price—a practice that can occur day to day, if not minute to minute—we ...