Timing the Stock Market
History shows to buy stocks when the economy looks bleak but consumer spending shows signs of improvement.
The best time to sell is when consumer spending and growth peak. This contradicts the instinct to buy when times seem good and sell when worried.
Take the counterintuitive approach.
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The book Ahead of the Curve by Joseph Ellis discusses improving economic forecasting by using the right indicators and tracking year-over-year data instead of short-term fluctuations. It argues that recession definitions are overrated, and that slowing growth is more damaging than commonly realized. The book advocates focusing on consumer spending as the main economic driver, and provides guidance on relating indicators like incomes, interest rates and stock markets to spending. It aims to help readers make better forecasts for economies, industries and companies.
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Similar ideas to Timing the Stock Market
The best time to sell is when the economy is peaking, which is counterintuitive for many people. People want to believe that the good times are going to keep rolling.
JOSEPH H. ELLIS
The Twelve Silliest (and Most Dangerous) Things People Say About Stock Prices
- IF IT’S GONE DOWN THIS MUCH ALREADY, IT CAN’T GO MUCH LOWER.
- YOU CAN ALWAYS TELL WHEN A STOCK’S HIT BOTTOM
- IF IT’S GONE THIS HIGH ALREADY, HOW CAN IT POSSIBLY
GO HIGHER?
- IT’S ONLY $3 A SHARE: WHAT CAN I LOSE?
- EVENTUALLY THEY ALWAYS COME BACK
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