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No investor will ever get it right 100% of the time

No investor will ever get it right 100% of the time. And fear of getting it right every time will result in low performance:

I was talking with a client yesterday who has some cash to invest, and he said the market is so high now, he was afraid to invest now. This thinking assumes you can “beat” the market by finding the low points, waiting to invest then, and then thinking you’re smart. The fallacy with this approach is that the investor will miss sudden run ups because he is waiting for the right time to get in. Statistics will show that most significant gains in markets happen in 5 or 6 days in any given year. And you can’t see them coming. You have to be positioned so that when these run ups happen, you are already in and can benefit.

So, the guy who waits for the right time is technically correct, and in the short term, if he waits in the sidelines, he may avoid a dip if the current market is high. But he will miss much more when the turnaround happens suddenly because he won’t be in when it happens.

As in your portfolio, when you see a drop of $500, you have an emotional response: “ Oh my god, I just lost money, maybe I should have waited to invest.” 

But the truth is, markets will always go up and down in the short term, and you haven’t lost unless you sell. If you hold tight, continue to pour every investable dollar in at regular intervals, you will end up with more money, with less risk, than the guy who thinks he can time things.