The elusive search for goat number 3
He then asks the question “Can you name five investors who have ‘consistently’ identified bear markets, stepped out before the fall, and entered back at the bottom?”
He then shares some invaluable quotes from legendary investors about market timing:
“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently.” —Jack Bogle
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” —Peter Lynch
“The years ahead will occasionally deliver major market declines—even panics—that will affect virtually all stocks. No one can tell you when these traumas will occur.” —Warren Buffett”
He then concludes with a simple yet brilliant summary:
“Inevitably over the years, I have realized that the mistakes done trying to avoid a market decline is actually more damaging than enduring the actual market decline. If 2020 has taught us all one thing, it’s that no one—no one—knows what markets will do in the short run.
While our inevitable search for ‘Goat Number 3’ continues, we unfortunately forget to take advantage of the three existing goats completely under our control.
1. Optimism: Belief in entrepreneurs and human ingenuity
2. Long-time horizon: Patience to let compounding do its magic
3. Capacity to suffer: Ability to endure temporary declines”