If you plan to achieve financial freedom by betting when the stock markets will go up or down, then good luck. It’s very hard, and if this is your approach – moving in and out of the stock markets — my guess is that it won’t work well for you. Consider the story of the storied investor Carl Icahn. He is famous – and infamous — for being a fierce, hard-knuckled corporate raider, or what today they more politely call an “investor activist.” The movie Wall Street might have been based partially on him (and another gent named Ivan Boesky). Carl Icahn has been an investor activist since at least the late 1970s, and he has amassed billions buying and selling stocks in the companies that he “raids.” But recently he lost a tremendous amount of money by, among other things, placing a big mis-timed bet that the stock markets would drop. . . by a lot. If Carl Icahn has difficulty timing market drops, then so will you. Of course, it all depends on your time horizon. Historically, stock markets have risen over long durations. If history will repeat itself or rhyme, then making a long-term bet that markets will go up is fairly safe. Buy some broad-based index fund funds, such as SPY that track the S&P 500 index, and forget about them. Come back fifteen or twenty years later, open your account statement, and you’ll probably be very happy. Also, when stock markets drop A LOT, like a bear market or crash scenario — when everyone is upset and interest in stocks wanes — it’s usually a great time to buy. It’s harder, though, to figure out the opposite, namely, when a euphoric market way up in the stratosphere will pop and drop, or perhaps crash. A lot of people, including Carl Icahn, have lost a lot of money trying to time stock market declines. This should not be a tool in your arsenal.
It’s Hard to Predict Short-Term Market Direction
