Sunday, November 8, 2009


For years now I've browsed financial blogs and almost without fail I've found that the average, (and not so average) retail investor thinks he can time the market just by looking at charts.

Most people will always take the easiest path if given a choice. Let's face it looking at a chart and making a financial decision is by far the simplest way to invest.

It requires very little time (probably seconds in most cases). No expenses (other than  basic charting software). Financial statements? Who has time to go over financial statements?

Does anyone truly believe that the Moe Ronn's of the world can really beat the system this easily?

I can assure you that you will not, at least not over the long haul, and you certainly will not get rich this way.

Certainly everyone looks at charts but there's a lot more to timing the market (history suggests that for about 99% of investors it's a losing proposition) than that.

Besides charts I would suggest one needs to also watch sentiment. That's going to require a tremendous amount of work or a subscription to one of the excellent sentiment services. Not exactly something that the average retail investor looking to make a decision in 30 seconds is going to commit to.

A working knowledge of cycles is also probably high on the list of requirements if one is going to have any hope of timing the markets. Again something that's going to require a lot of study or a subscription to one of the many cycle analysts.

Some idea of past historical tendencies. Again one is getting into many hours of research here.

Money flows. Unless you have some idea what the big money is doing and follow in their tracks you're going to be fighting an uphill battle. A subscription to Lowry's is going to cost you a very pretty penny.

And even if you are willing to put in the time and effort or fork out the dough to cover all angles of the market you still won't achieve a big edge over just throwing darts. Every system breaks down. And I can tell you that every one of these tools has in fact broken down repeatedly over the last 2 years and they will again.

Trying to time the markets is a very iffy proposition even if you have all the tools stacked in your corner. Do you really think you are going to have long term success by simply looking at a chart and clicking a mouse?

History suggests you will not!