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Is Market Timing Really that Important to Investors?

One of the hottest topics you would find in the investment industry is about Market Timing. Ninety per cent of the effort from all experts has gone to predict what the market will do next, and most investors are hoping that they get in and out of an investment at the right time.

There are three camps of experts that are giving you advice on Market Timing.

The first camp will tell you directly when is the right time to buy or sell property and shares. Those who have successfully predicted the Market Timing every now and then tend to be regarded as the “authority” … until they eventually get it wrong, then the new “authority” emerges.

The second camp of experts are not that “silly” to give you their predictions in black and white; they tend to beat around the bush to cover themselves so that they don’t have to look bad one day. They are hoping that you pick the side you have a bias on yourself and agree with them.

Learning from the previous two camps, the third camp believes any time is a good time – there is no need to pick, and you invest whenever you can. In other words, they completely avoid the issue of Market Timing, and focus on Time.

You would have probably heard “you don’t wait and buy real estate; you buy real estate and wait”. Then you have people following this camp just go in and buy immediately, and later on find themselves having to sell at a lower price.

I hope by now you have realised that the above three camps of experts have covered everything regarding Market Timing for investment, yet it doesn’t matter which camp you follow: the results are very similar – you have people making and losing money, and that’s why the three camps still exist and continue to serve their followers.

So, is Market Timing that important?

You have probably seen this phenomenon: there are successful investors that can make money regardless of the market conditions. They make good money during good times, and they make even better money during bad times.

To these successful investors, there is one thing that is constant: they make money regardless of changes in the market. Market Timing seems to have very little effect on them. You have probably also seen the opposite phenomenon: there are investors that would lose money even when the market was doing great. These investors lose money during good times, and lose even more money during bad times.

To these unsuccessful investors, there is one thing that is constant: they lose money regardless of changes in the market. Market Timing also seems to have very little effect on them.

Why does Market Timing have very little effect on our wealth?

Market Timing is really about what other people may do in general – it’s all about other people, and it’s referring to something external to us.

The fact that successful investors manage to make money while unsuccessful investors manage to lose money at the same time (regardless of Market Timing), is a clear indication that it’s not our external world that determines whether we make or lose money, it’s something inside us.

Some people may guess this something inside us is knowledge, such as the information on property selection, valuation, construction, architecture, town planning, finance, tax, legal, asset protection, etc.

But is it really?

Let’s ask another simple question: “In any of the listed areas above that you want to gain more knowledge from, there are experts in those areas who know more than you would ever know … and yet they are still struggling financially. Would knowing what they know be the answer?”

I am not saying we don’t go and learn about the technical knowledge, what I am saying is that they are at best 50 per cent of what we need.

There is another phenomenon that most of you would have seen with someone you know, sometimes intimately: they change from job to job, business to business, spouse to spouse, investment to investment. They seem to know how to make more and more money, and yet somehow they manage to attract different situations that keep their net worth pretty much the same all these years.

The obvious thing you can see in the pattern is that the situations that cost them money seem completely unrelated, but somehow they manage to achieve the same goal: keeping their net worth pretty much the same. The only “related” factor in all these “unrelated” situations is the person himself (or herself).

I know it is hard to imagine, but if you can think of money as water for a minute, based on the above pattern, these people seem to have a fixed size cup to hold money; a pretty small one, too!

They will spill it all over the floor once the cup is getting full. Their lifetime job is to find different tools to fill this cup with water. They spill the water along the way to make sure it’s never really full, so that they can get busier and become more efficient at filling it.

At the end of their life, they only have this small cup of water, and die with little money, knowing they’ve done their best trying to fill that cup. You may ask: if they want more water, why don’t they just go and get a BIGGER CUP?

I agree. Why don’t they?

People are often confused, not knowing the difference between the activities of filling the cup and the activities of getting a bigger cup. We can get very busy in filling the cup, but no time to get a bigger one.

How can you tell if you have a small cup?

It’s very simple. Look at your current net worth; if you feel that you know how to make more and more money, but your net worth increases a lot slower than your earning capacity and knowledge, then you have a SIZE problem!

Let me ask another question: for people who have a very small cup for money, do they really need to worry about Market Timing? They are not going to have more money than their cup can hold anyway. I know what I would do if I didn’t have a bigger cup – I’d go get some sleep now (at least I’ll die one day knowing I didn’t waste time worrying about it)

On the other hand, for people who consciously make an effort to increase the size of their cup (the invisible mental capacity for wealth), they don’t really need to worry about Market Timing at all!

If other people’s cups are small and full, they will be spilling water during good times and bad times. Meanwhile, you have a forever expanding cup – you’re in full anticipation to allow any spills from others, so you’re going to have more water in your cup regardless of the market conditions. The chance is that you’re going to catch more spills from others when they panic during bad times.

Money is like water. It may change forms, but it doesn’t disappear. It simply flows on, from one person to another, and always end up with whomever that can hold it. So stop worrying about Market Timing, go get a BIGGER CUP!

We live in the world of duality; there is no left without right, no good without bad, no before without after, no inside without outside.

For investors who rely on Market Timing to make their money, they are really relying on something external which they have no control. No wonder they worry themselves sick.

For investors who rely on their “internal workings”, they can attract wealth during good times and bad times, they can “accidentally” pick the properties that will go up in value even during bad times, and properties with money already left on the table will find them without much effort. They are always so “lucky” to find the perfect JV partner at the right time, and money always “appears” out of nowhere when they need it.

Some of you may be sceptical about what I have just said in the last paragraph, because “it doesn’t seem to make logical sense”. Do you know most of your fundamental functions that give you your life “don’t make logical sense”?

Can you logically explain why your heart beats the way it does, your digestive system digests food the way it does? In fact, if any of these functions require any logical input from your logical mind before they can work, you won’t be able to finish reading this paragraph?

There are so many invisible forces out there that don’t make sense to our logical mind, because illogical stuff can only make sense to our illogical mind. Our logical mind is here for our survival, but at the same time it is also the biggest barrier to us becoming wealthy.

We know the tree from the fruit it grows. What is underground (invisible) determines what is above the ground (visible).

Our external world is a true reflection of our internal world. If we take good care of our internal world, our external world will come to us accordingly. I have always tried to focus my energy to ask lots of questions, as I believe the quality of our life is the quality of the questions we ask. Let’s ask ourselves a better quality question:

“What is it that I can have in my internal world that can guarantee my success in wealth regardless of the changes in my external world?”

If you know the answer to the above question, you can live in certainty with no fear, and you will know that wealth is your birthright, no-one apart from yourself can take that away from you. The good news is that you already know the answer, but you just may not remember it!

Bill Zheng is founder of Investors Direct Financial Group, a leading property finance company providing financial solutions for property investors and developers. Bill is a keynote speaker at many property and finance conferences throughout Australia.www.investorsdirect.com.au



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Bill is founder of Investors Direct Financial Group, a leading property finance company providing financial solutions for property investors and developers. Bill is a keynote speaker at many property and finance conferences throughout Australia. Visit www.investorsdirect.com.au


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