...I do pretty much just buy and hold, but I often find my self building up cash cushions and waiting for a nice correction for an entry point. That certainly qualifies as timing, and is what I find myself doing now. I really do hate lazy money tho...
I do not trade that often, and as I have said repeatedly, my porfolio turnover is lower than that of Wellesley. However, I watch the market daily, and as you said, that watching or the interest is that of a market timer.
Now that I think of it, maybe this gets back to old suspicions of speculation as an evil activity.
Indeed, speculation is regarded as evil by some religions. Perhaps in the old days, before the days of the stock market and in the Middle Age, speculators traded and hoarded commodities such as grains, and caused shortage and made a killing during famines. This would be frowned upon, and the unfavorable view carries until today. A religious Web site says that "
The speculator, even if he succeeds, produces nothing; he reaps the fruit of the toil of others, he is a parasite who lives by preying on the community."
Another religion prohibits the charge of interest for loans. Yet, it recognizes that businesses must be allowed to have profits. So, without charging interest, how do banking and financial transactions take place? They construct these deals so that they become "profit sharing" transactions, then it all becomes moral and legal. I suppose that turns one's banker into his business partner, which is not at all bad, but I am not sure how it works in practice.
The dictionary defines "to speculate" in the investment sense as "
to assume a business risk in hope of gain; especially to buy or sell in expectation of profiting from market fluctuations". Speculation can be done with anything of value. The housing speculation done by millions of Americans who probably owned no stocks caused the housing bubble burst preceding the recent Great Recession.
In the loose sense of speculation, because stocks carry some risks, buying stocks is itself a speculative move. This is indeed the view of some people, a minority here surely, who would buy only CDs or treasuries. They regard any stock movement as risky, and equate stock investing with gambling. Whether they see the risk of inflation with fixed-income instruments, we do not know. Perhaps they recognize it but prefer that surely gradual loss to the risk of a potentially higher and faster loss with equities.
Next, one can see that even the buy-and-rebalance investors are also speculators, as they expect that the relative price of stocks and bonds will revert to the previous mean. They rebalance because of that very anticipated price movement. Surely some "buy low" because they believe in the fundamentals of what they buy, but many rebalance because they think "what goes down must come back up". Only the strict buy-and-hold who never sells can argue that he never speculates. He must also hold a declining stock even if he thinks it is going bankrupt.
Wikipedia has the following excerpt.
According to Ben Graham in Intelligent Investor, the prototypical defensive investor is "...one interested chiefly in safety plus freedom from bother." He admits, however, that "...some speculation is necessary and unavoidable, for in many common-stock situations, there are substantial possibilities of both profit and loss, and the risks therein must be assumed by someone." Thus, many long-term investors, even those who buy and hold for decades, may be classified as speculators, excepting only the rare few who are primarily motivated by income or safety of principal and not eventually selling at a profit.
So, I would say that most of us are evil here, and differ only in how we see ourselves.
By the way, in jest, I often quote the character Gordon Gekko's saying about greed. They had a sequel to the movie
Wall Street. It's called
Wall Street: Money Never Sleeps, came out in 2010, and enjoyed some popularity. Because I do not get out much, I heard about it just now, and will look for it.
Guess I will continue to invest in med's.
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