It's all about timing

Winter has come.  The thick morning fog is here, the wind has come, and my driveway is covered in needles and leaves.  What will follow is pretty predictable, and though I can't give you a day it'll happen, in general it'll get colder for awhile, snow, and then Valentine's Day will be upon us.

Don't you wish investing matters were as easy to read?  They can be.  I'm not saying anything is 100% (maybe it won't snow after all), but you can sure come close.  Just like in 'Groundhog's Day' things that shouldn't have any reason to repeat... do.  What we're going to talk about today isn't a specific trade; just a different way to think about things.  Timing works.  It usually works better than 'buy and hold'.  Just don't get picky.

The thing is most people are working really hard at timing things exactly.  That is hard.  Timing things 'vaguely' is a lot easier.  For most people that also means a lot more profitable.  Let's look at the crazy ups and downs in oil for an example... When oil got to be $120+ a barrel it was pretty clear that things just couldn't 'work' the way they always had at that price.

If you shorted or bought long dated put options you would have promptly started losing money as it just kept climbing... but once it fell below $60 or so you had made a very large sum  indeed.  If you carefully watch stops you might have held all the way down to $40 or so.  Could you have timed it perfectly at taken it down to 33 dollars a barrel?  I doubt it.  Once it got super cheap (say $40 or so) you'd have lost money buying it, or buying long dated calls... as it fell further down.  Of course now that is at $80 less than a year later it seems to have worked out just fine.  Could it go back up to $120?  Sure.  If you do stay long (I am), just watch your stops so that when it does turn you can exit the trade well instead of wishing you'd sold sooner.  Should you buy or sell right now?  Well, right now the technicals say 'buy'... but to me we're on the 'thinking about selling' side of the easy trade, the 'time to buy' side of it was back near $40.  That is the difference.  The short term timing guys are all piling in now... right when I'm looking to get out.  Maybe they'll make a killing... but I know some of them will get killed instead.  I'd rather just take the 'easy' trades.  There are enough of them out there.

So that is the message today.  Think longer term.  Stick with easy trades.  They can (and do) still lose money now and again, but if you buy things that are trending properly at good prices, and if you sell things that are sliding from high prices, you'll do very well.  Don't try and pickup quarters in front of  a steamroller.  Timing 'big picture' situations is easier than day trading.  And easier means more profit for most people.

Of course this method doesn't need the best self directed IRA on the planet, allowing you do invest in all kinds of things, but that's ok, there is good reason to self direct with some money, and leave some in the market.  Today I focused later.  We'll cover more on the former soon... That arena being the most fun on many different levels.