Notes on timings

Popular notion fueled by advisors and written material in finance literature points to a strict NO when it comes to timing the market. But then if you run the portfolio simulator and backtest various allocations and performance models, it clearly points to the impact on timings. Of course, we live in the present and have some benefits of past and immediate past and the pressures of the future as well as that of the immediate present. Put all this, and you have very limited time to analyze or react to what is going on currently in a dynamic medium like a market. Add to that, for most of us, the finance stock market is not the place of employment. We could be in something related like technology or something a bit more  farther off which will further skew your views on the materials that you read and absorb in real time. Then there is often well crafted and formatted views which can manipulate you without you even realizing that you are being cooked! Hence it is better to be slow in such environments and take time to find that needle in the haystack. By that I dont mean finding a gem of the stock or anything like that. Rather, on the defensive side, not to be burned by any one particular philosophy. Diversification is the mantra for that though there might be others who will say not. First diversify. And by that I mean not only assets but also your thoughts. So apart from long term static investments, have some that is in short term or medium term, some in auto pilot mode for the new money while some in the cash only or CD mode for a rather lengthy period of time. Why ? Well because if you run various asset allocation porfolio between 2006 and 2016 you will see that for $10,000 investment, you get about $15,000. And with or without rebalancing at various levels of frequency - annual or semi annual or quarterly or what not, you end up with a $1,000 differential here and there. 

So assume you do all this, still there is no enough thought diversification. The one related to timings say that leave them alone, determine a time horizon and do not touch. Yet in the above example, if you had contributed in lower amounts thru 2008 and racked up during 2009 then you have a $20,000 balance at the minimum without the other variables. Meaning, no rebalancing or anything but during the gloom days when everyone is pulling off the market, had you just put even about $5000 in it, you are still nearing $18,000. Hence, we will never discount the aspect of timing. That definitely does make a lot of difference.