Timing is only part of the puzzle. (Photo: Freepik, Ganzenvayna1)
When investing, investors always face the question of when it is best to buy and sell. Although the right timing contributes significantly to success and failure, it is not the only relevant factor. Sometimes patience can pay off instead of acting immediately. Patience and endurance can compensate for unfavorable purchase times.
Timing is only part of the puzzle when investing
It is tempting to believe that the right time to get into or exit is the key to success. The entry price can influence the return, but it is not the sole success criterion. The quality of the investment and a long -term way of thinking are much more important. If you are just waiting to buy as cheaply as possible, you can fall deep. Examples have been Bayer or PayPal in recent years. However, if you rely on quality instead of waiting for cheap courses, you often have more success – an example of this would be Apple.
The flood of news leads to rash decisions
For investors, today’s digital media are increasingly more curse than a blessing. The constant flood of information leads many to act impulsively and make decisions from the gut. The media and stock market landscape are designed to play with the consciousness of the investors and motivate them to act constantly. Day after day, quarter after quarter, the focus is on new trends and fears.
While Clean Energy shares were in demand in 2020 and hardly anyone was interested in armaments shares, the picture looks very different today. News influence courses in the short and medium term, but in the long term, business model, quality and evaluation count more than mere trends and stock market fantasies. However, many investors can be hasty from short -term developments and impulsive decisions, which harms the return.
Emotions drive stock market courses-example meta share
Investors determine the share prices. If the interest increases and there are many buyers, the courses attract. On the other hand, if fears predominate, sales pressure and the courses fall. The stock exchange is strongly driven by mass psychology and emotions until a realistic evaluation prevails again. The constant focus on short -term price fluctuations can therefore be deceptive.
A good example of this phenomenon is the meta share. Who still remembers their dramatic drop in the price? Within 14 months, the value of over 300 euros fell to less than 100 euros before the paper was able to double again within six months and now noted at over 500 euros. This shows that share prices are often more influenced by the market substance than by fundamental company data. Meta has hardly changed during this time and is primarily an advertising platform with steady growth and cash flows today.
Patience as the true strength of experienced investors
Patience is one of the most valuable properties of a successful investor, especially in turbulent market phases. Again and again there is exaggeration – both up and down. Many investors tend to interpret short -term price movements as a signal: A falling course indicates a bad, unprofitable share, while an increase is considered a confirmation of a correct decision.
But long -term successful investors cannot be misled by these fluctuations. Successful investors question these fluctuations at a quiet moment and come to a rational conclusion. This approach leads to in -depth and non -emotional and irregular investment decisions.
Sales decisions are usually wrong
A study from 2016 examined the investment decisions of more than 3,000 funds over a period of 10 years. The focus of the study was on how purchase and sales decisions affect the returns achieved. While the purchase decisions led to an annual outperformance of 1.4 percent, sales decisions caused an annual sub -performance of 1.8 percent. Viewed for over 10 years, this meant a significant reduction in return due to poor sales decisions.
Conclusion: Timing at stock investment
It is not easy to find a balance between action and patience today due to social media, internet, TV and Co. Messages often patter us unfiltered. While the timing of the markets is very relevant for performance, a short -term, emotion -driven reaction is harmful to performance. Short -term messages rarely influence the long -term investment decision.
Patience and a well -founded analysis and trust in your own investments protect against wrong decisions, impulsive action and unnecessary transaction costs.
Disclaimer:
No investment advice. No call to buy or sell securities.