Reassessing Stock Market Success: Timing Over Picking
Have you ever questioned the conventional wisdom about achieving success in the stock market? What if it’s not just about finding the “next Amazon” or “next Nvidia”? Investors often hear these promises in marketing messages, yet actual success may depend more on management than on selection.
As you navigate wealth growth, consider this unconventional perspective: it’s less about which stocks you choose and more about how you oversee your investments.
This might sound strange—picking the right stocks is less critical than the way you handle them?
Indeed, it is. Success often hinges on choosing wisely and managing effectively, rather than merely putting in more effort. As iconic New York Yankee Yogi Berra said, “You don’t have to swing hard to hit a home run. If you got the timing, it’ll go.”
Understanding the importance of timing can affect many areas of life. Agriculture, for example, relies heavily on timing. With the autumnal equinox recently passed, now is the moment for farmers to harvest tomatoes, sweet potatoes, apples, and pumpkins.
Similarly, timing is essential in comedy; the punchline must land just right. Musicians must know when to come in and how to stay in sync for a great performance. The same principle applies to managing your investment portfolio.
The Dreaded Round Trip
If you’re like many investors, you may have held onto a stock for too long, missing out on better exit points. A relevant example is Zoom Video Communications Inc. (ZM), which became indispensable during the COVID lockdowns.
Zoom surged as remote work encouraged people to connect virtually. The chart below illustrates ZM’s stock price from the onset of lockdowns in March 2020 to a year later.
If you invested in Zoom after April or May, you likely saw over 150% gains. Many believed the future of remote work was bright; however, markets adjusted as vaccines rolled out, and people’s desire for in-person interactions grew.
This two-year chart illustrates the extent of the losses faced by investors who didn’t sell at the right time. They likely watched their gains vanish by holding onto the stock too long, hoping for prices to recover, especially evident in mid-2021 when the stock experienced another short-term surge. This behavior is common—we’ve all been there, driven by emotions of fear and greed.
While stock picking is important, it’s just one piece of the puzzle. Regardless of how wisely you invest, it’s crucial to manage your holdings to preserve your gains.
Getting the Timing Right
Readers of the Digest may be acquainted with Eric Fry, a macro investing expert with 30 years of experience. He has made notable predictions, including alerts about the dot-com bubble and the 2022 tech crash.
Eric’s foresight has helped his readers achieve remarkable returns, with 41 separate instances of identifying stocks that soared 1,000% or more.
Recently, Eric hosted a special event focused not on stock picking, but on managing investments effectively.
Because the way many, if not most, investors approach the market is completely wrong – and it’s a potential setup for failure.
We are on the precipice of a series of huge, market-changing events: recession rumors, a divisive election, rising living costs, and more. It’s all a perfect storm for the most bruising losses of some investors’ careers.
However, this isn’t all doom and gloom. There is a way to prevent this fate – and even emerge in a better spot than you were before.
The stock market has had a positive year, up over 20% in 2024 as of this writing. However, prospects for instability loom as a contentious election, Federal Reserve rate cuts potentially reigniting inflation, and conflicts abroad could challenge markets in 2025.
Focusing solely on stock picking while neglecting management strategies can lead to pitfalls. At The Great 2024 Sell-Off event, Eric unveiled a clear method to identify the best times to buy and when to take profits before downturns occur.
Many investors who clung to Zoom for too long might have benefitted from such guidance.
To learn more, check out the recording of The Great 2024 Sell-Off event by clicking here.
Enjoy your weekend.
Luis Hernandez
Editor in Chief, InvestorPlace