In a previous post, we talked about ways to buy-and-hold.
Of course, many people will tell us we can’t time the market.
Which, of course, isn’t true.
Some entry points are clearly better than others. How do we find those entry points?
Just wait for the stock or ETF you like to be on sale.
Back on 1/3/2022, SPXL (the S&P 500 3x ETF) was riding high and trading around $145.
“It’s not timing the market, it’s time IN the market,” say the “research-based” experts. Cute phrase.
Okay then, since we can’t time the market, we’ll get in right now at $145 (see the red arrow below).
No time like the present and we can’t do better anyway!
How did we do?
Yikes.
Our timing was horrible.
Almost two years later we were sitting at $89.
Thanks, experts.
But instead of blindly following cute sayings, we could’ve simply waited until SPXL was lower than “fair value”. In other words, we could’ve waited until price was under the 800 SMA.
We could’ve entered at any of those red arrow levels. Let’s say we got in around $60.
How did we do?
For one, we would’ve been nicely profitable by late 2023 when the no-market-timing people would’ve been deeply negative.
For another, our $60 entry would now be at $139.
By timing the market using a technical “fair value”, we’d be up over 100%.
By listening to the experts, we’d still be negative over two years later.
Happy trading,
— Scott Welsh
