Hmm, our last post advised against market timing. But wait, what if there was a way to successfully time the market, and an easy way at that? Well interestingly, err...amazingly, data shows that over the 25 years between 1993 and 2018, nearly all of the stock markets gained have happened at the same time each day: overnight. And the phenomenon was even more pronounced in 2020.
Yup, if sold at the open and bought at the close each trading day you would have been up 600%. Look, if you bought the S&P 500 at the end of 1992 and held on, by the end of 2018 you were up 857% (with dividends). So yeah, better to just invest and forget about it. But if that's too boring then this might be your best bet: buy at the market at the open and sell at the close.
Why does this work, even if market participants know about it? Well maybe for a couple of reasons:
1. Retail investors panic (of course!) and often flood the market at the open.
2. Buy backs by corporations (of course!) always at the end of the day.
3. Just for good measure, there's also the conspiracy theory that the Plunge Protection Team buys in the more thinly traded afternoon sessions to prop up stocks.
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