I’ve argued in the past that trying to time the market is a near impossible game for most of us to win over the long term. This prompted the question “why should we bother trying to do anything like becoming a doctor or a lawyer – there will always be someone else who is better.”
It’s certainly true that we can’t reasonably expect to be the very best doctor, lawyer, programmer, or poker player in the world. However, doctors don’t have to compete against every other doctor in the world. It might be tough if the world’s best doctor has the office next door, but under typical circumstances, a doctor merely needs to be in the middling range among his peers to run a successful practice.
In the case of a poker player, he just needs to find a game where he is an above average player. The fact that better players exist in the world is of no concern if they aren’t seated at the table.
However, when it comes to market timing, you can’t choose your opponent. Equity trading is essentially a world-wide game where everyone must compete against the very best players all the time. When trying to decide whether now is a good time to jump in or out of the market, an army of professionals with much better access to relevant information than the typical trader are competing in the same game.