[roenxi]

The denizens of the investor forum would be wrong; it isn't trying to time the market. This strategy is simply valuing the stocks.

The problem with the plan is that holding piles of cash is a game for losers; you need the money to be in some sort of asset - it matters not what - to avoid the printers of the central banks. There is a real chance that stock prices never come down as much as everything else goes up.

[mewpmewp2]

As a sole investor you can't in modern day value stocks more accurately than their current market cap.

Any difference in valuation you come up with compared to the market cap would simply mean that there's something missing in your calculations that makes up the difference, as the stock and its market cap is coming from thousands of times more complicated methods for valuing the stock than whatever few metrics you were able to consider.

Essentially by using some sort of method to value a stock, you can only fool yourself to think that you know what you are doing and are skilled beyond luck. Because you are competing against institutions with state of the art tools, researchers and experience.

[roenxi]

> Any difference in valuation you come up with compared to the market cap would simply mean that there's something missing in your calculations that makes up the difference

Not necessarily, can also mean that your circumstances are different from the large traders. Value is relative to your net worth, status RE the tax system, risk tolerance and current allocation. So it is not only possible but likely that the large traders have a valuation that is correct for them and wrong for you as a small market participant.

Besides, if all assets are - in some sense - equal then any inane strategy that involves buying assets is equivalent to any other and just dumping all the cash into any basket of assets is workable. So people could probably buy just assets they like and expect an equivalent return to everyone else. If that logic holds.

[mewpmewp2]

> people could probably buy just assets they like and expect an equivalent return to everyone else

That's pretty much true. Although risk and volatility does differ from asset to asset. So as a lone investor you can decide how much you are willing to risk to get better returns.

[M3L0NM4N]

I firmly believe that you should just invest on a fixed schedule. Every month, every year, whatever. And if you see a significant drawdown in between those periods you can buy in before the next scheduled buying time.

But never get scared from investing when stocks are too high - this strategy works one way because you should always be long the market.

[paulmd]

> The denizens of the investor forum would be wrong; it isn't trying to time the market. This strategy is simply valuing the stocks.

trying to pick the stocks that are least overvalued is great and everyone should be doing it all the time. (assuming you are investing in individual stocks and not index funds)

the problem comes when you say "everything is overvalued so i'll sit in cash until the market is less overvalued" and yes that's timing the market.

> The problem with the plan is that holding piles of cash is a game for losers; you need the money to be in some sort of asset - it matters not what - to avoid the printers of the central banks. There is a real chance that stock prices never come down as much as everything else goes up.

yes, you've identified the central problem with timing the market, this is precisely why it's a bad idea in general.

As others are saying: if you accept the efficient market hypothesis then your guesses are inherently no better than random chance, unless you somehow have unique insight that nobody else in the market has. Otherwise if you've successfully identified a trading strategy that worked, it would be exploited until there was no longer any value there, and the market returns to "no better than random chance".

(there's the old joke: an economist and his friend are walking down the sidewalk. The friend spots a bill laying on the ground and says "look, a hundred dollar bill!" and bends down to pick it up. But the economist keeps walking, saying "of course it can't be, if it was then somebody would have picked it up already." It's a meme but in a macro sense it's true, there are small pockets of alpha that can be exploited on a small scale but in the macro sense the market is as efficient as it can be and everybody else is just as aware as you that "the market seems overvalued right now" too.)

Therefore the best strategy is to dollar-cost-average across some span of time and accept that you may have missed a percent here or there but that the market is generally going up by more than you missed - and that you also may have timed it poorly and cost yourself a percent or two as well.

[roenxi]

Timing the market means you are predicting when something is going to happen, ie, has elements of time involved.

Valuing an asset and then not buying when it is expensive is a completely different activity. It involves no prediction on how long it will be before the price corrects relative to value.