Timing Your Investment

Did you know Blockbuster once had the opportunity to acquire a fledgling video streaming company named Netflix?

Blockbuster passed on the opportunity, claiming the timing wasn’t right for streaming. People still liked their DVD’s too much. We all know how that worked out. Netflix is synonymous with video streaming, and Blockbuster has one remaining outlet in a remote part of Alaska where WiFi is unreliable.

In 2007, Microsoft CEO Steve Balmer ridiculed Apple for releasing its revolutionary touchscreen iPhone – declaring that consumers would not be willing to pay a premium price for a touchscreen iPhone. According to Balmer, the timing wasn’t right.

Microsoft was going to stick with its push-button phones. It finally came around to touchscreen phones a year later but by that time it was too late. Apple and Android were firmly entrenched in the market. Today, the iPhone is ubiquitous, and Microsoft doesn’t make a phone.

History is full of examples of missed opportunities because investors misjudged the “timing” of an opportunity or product. In other words, they waited too long.

With the recent market panic over COVID-19, investors will continue to make the same mistake of waiting too long to get back in the market.

Main Street investors are accustomed to lost opportunities because of their speculative investing strategy. Most stock market investors are gamblers – moving in and out of the market, attempting to profit and minimize losses from wide market movements.

The COVID-19 panic has put this speculating behavior on full display with investors trying to time the market to reduce losses with many many who jumped ship early, trying to time the market to get back in the water. The problem with timing the market is it doesn’t work.

Going with the herd is human nature. However, Warren Buffett advises against going with the herd. He once famously stated,

“Be fearful when others are greedy and greedy when others are fearful.” 

Warren Buffet is right. If you wait to get back in the market when everyone else thinks it’s safe, by then, the timing will be wrong.

Most investors find that they should have gotten back in sooner. The problem with timing the market is that no matter what crisis triggers a market panic, most investors who end up following the herd wind up blowing up their portfolios at rock bottom prices and end up diluting long-term gains because they wait too long to get back in the market and end up overpaying

Speculating and timing the market goes with the Wall Street territory.

That’s why successful investors don’t speculate. Timing doesn’t matter to them. They invest in assets and with a long-term perspective that is impervious to the dips and falls of Wall Street.

While mainstream investors put themselves behind the eight ball then have no choice but to time a jump onto a railroad car to get to their destination, successful investors would rather pay for a ticket if it gets them to their destination. So, while mainstream investors fall flat on their faces with ill-timed jumps, successful investors relax and ride out the latest panic.

For successful investors,

THE TIMING IS NEVER RIGHT

In other words, there’s never a right time and a wrong time to invest.

For the successful investor,

NOW IS BETTER THAN WAITING

Successful investors don’t speculate. They invest in cash flowing tangible assets that grow over time. They know there could be fluctuations now and then (nobody was immune to the drop in 2008).

Still, over time, cash flowing tangible assets such as commercial real estate, agriculture, energy, and productive businesses will appreciate, so there’s no need to fuss over short-term fluctuations.

With income-producing real assets, cash continues to flow during panics.

So while mainstream investors run for the hills and liquidate their stock positions for cash, successful investors don’t have to worry about money because their recession-insulated assets continue to cash flow. Also, the type of assets these investors are invested in preventing the type of selloffs that plague the public markets.

Smart investors invest for the long-term.

And it’s because of long-term illiquidity that they’re able to see beyond short-term crises. While Wall Street’s liquidity fuels speculation and panic, private investments with long lockup periods prevent investors from acting on their whims.

Private investment illiquidity not only shelters investors from market volatility but also allows their assets to incubate and flourish.

Successful investors know that in the long-run, cash flowing real assets provide consistent cash flow, deliver some of the best risk-adjusted returns of any investment class, and reliably appreciate over time. That’s why there’s never a bad time to invest in these assets.

For investors tired of the Wall Street roller coaster and worried about the timing of their investments, there has never been a better time than now to get started with the right investment assets.

Kyle