Market timing

Making macroeconomic forecasts for the near future is a task which is easily done - easily done wrong.

-Adit Agarwal

This is an amazing video by Ray Dalio, one of the most Principled and succesful investors, and someone I admire!

I have now watched this video multiple times, and can't help but wonder where the world is today, with regards to the economic cycle. This stems from a desire to 'time the market'. Indeed, during the February correction earlier this year, I wanted the stock market to 'crash', so that I could make some investments. However, that entire episode, led me to realise that timing the market is impossible. Indeed, any predictions will tell you more about the forecaster than they do about the future.  A great example which depicts the difficulty of making macroeconomic forecasts, is Ray Dalio's statement (at Davos in 2018), just a few weeks before the February correction, that anyone sitting on cash was going to feel very stupid - After the correction, Mr. Dalio said that the economy was in fact further on in the cycle than he had initially imagined. It cannot be denied that the stock market is not a metric to be entirely ignored; it is a fantastic indicator of people's expectations, and when valuations become high, it is important to exercise caution. Similarly, when fear-driven crashes occur, we must be greedy, to paraphrase Warren Buffet.

The more important things to consider are: 1. Intrinsic Value, 2. Market Value, 3. Growth Opportunities, 4. Risk, 5. Management, and 6. Business model, before making an investment. This is because you want to invest in good quality companies that are trading cheap.