Is Timing The Market Important?

December Newsletter | Historically, many successful investors have been quoted as saying that they do not try to time their investments. This has led to the common belief that it is time in the markets and not timing the markets that is crucial to success. While we wholeheartedly agree that trying to time any financial market is a futile exercise, and time in the market is important for any long term wealth creation, we would suggest that time in the market alone does not guarantee satisfactory returns. A focus on “not timing the market” should be distinguished from waiting for attractive investment opportunities. The consensus opinion that “time in the market” should be the centrepiece of any investment downplays the significance of two very important aspects of investment management, the investment process and risk management. From our perspective, the concept of “time in the market” is almost as foreign as “timing the market” if no consideration is given to the quality of the companies invested in or to the price paid for each investment.