Waiting For a Better Time to Invest

Photo by Levi Meir Clancy / Unsplash

Very shortly before the market bottomed in March of 2009, Jeremy Grantham was quoted as saying, “Be aware that the market does not turn when it sees the light at the end of the tunnel. It turns when all looks black, but just a shade less black than the day before (emphasis added).”

I’m reminded of this every time I hear someone waiting for a better time to invest.

There is always going to be a reason not to invest and the financial media will always offer us a reason to keep waiting. 

Right now, they are telling us we need to be worried about a recession.  If we go into a recession, they will try to convince us that this recession will be worse and different than all the others. When the markets move higher, they will be screaming about dead cat bounces, double dip recessions, geopolitical crises, and anything else that sounds scary and gets clicks. 

While none of this really matters for long-term investors, financial media cannot allow you to take a long-term perspective.  Long-term investors don’t need to check their accounts very often and they don’t need to revamp their plan based on the latest data point.  They simply stay the course, politely ignore what happens from one day to the next and get rewarded for their indifference.

For example, on Friday, September 30th, CNBC had the headline, Charts suggest it’s ‘way too early’ to expect the stock market to rebound, Jim Cramer says.  The article then has the subheadings:

CNBC’s Jim Cramer on Friday warned investors that the stock market is unlikely to recover anytime soon.

• “The charts, as interpreted by Mark Sebastian … suggest that this market’s got more downside, and it’s way too early to go really bullish,” he said.

That all sounds bad BUT the next two months were the 13th-all-time-best for the S&P 500.

And just because Cramer is an easy punching bag, here is an article / video from Oct. 27th when he was nearly brought to tears, apologizing for his earlier suggestion that investors buy META before the shares fell 24% in a single trading day, putting them down more than 60% on the year.

The kicker, of course, is that if you sold on Cramer’s tears and capitulation, you would have missed the 20% rally in META shares over the next 13 trading days. But again, stock markets do not turn when they see the light.  They turn when things are just a shade less black than the day before.