One Way to Time the Market

The Holy Grail of investing is to get in just before the market rallies and to get out just as the market tops.  Although I have had occasional flashes of success (such as selling before the 2011 correction), I have not been able to consistently make the right call.   The toughest part is deciding when to get back in the market after getting out.

So now I use a different approach to time the market.  Whenever the a stock I own rises significantly, I may sell off part of the position.   If it rises further, I sell off another part.     This continues until I until I sell out of the position.   Similarly if a stock in which I am interested in buy falls, I may buy a small position. If it fall further, I add another small portion.  I do this until I have reached my target position.

An astute investor might note that the commission costs of each trade may make this approach prohibitively expensive.  My solution is to do this trade in commission free ETFs offered by the major discount brokers.   I can trade as little as one share with $0 commission cost.  The only caution is that some brokerages have a minimum holding period of 30 days, which is not that difficult to meet.   Some brokerages have no minimum holding period, which offers even more flexibility.

I have been doing this timing trade with a total market index ETF.   Right now I am selling off small positions, because I expect to be buying back at a lower price soon.

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This is not financial advice. Please consult a professional advisor.

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