Buffet's Advice on Market Timing

The market has started 2016 on a dour note falling just under 6% for the first trading week of the year and down 7.4% for the year so far. It can be tempting to extrapolate this performance to predict what the year ahead will look like, but just as the disclaimer at the bottom of every mutual fund ad points out “past performance does not guarantee future returns.” Markets can turn on a dime and often do, in order to benefit from the long-term compounding of returns it’s imperative to stay invested and stick to your plan.

Warren Buffett is probably the most highly regarded investor of our era. Read his statements carefully regarding efforts to time the market:

  • “Inactivity strikes us as intelligent behavior.”

  • “The only value of stock forecasters is to make fortune-tellers look good.”

  • “We continue to make more money when snoring than when active.”

  • “Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.”

And finally, Buffett recommends that if you simply cannot resist the temptation to time the market, then you “should try to be fearful when others are greedy and greedy only when others are fearful.”

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