by Jason Bodner

August 31, 2021

They say timing is everything. But is it?

Seeking perfect timing can be frustrating. For everyday life, we usually leave the outcome up to fate and let come that may. Adopting even a little fatalism can help bring a bit of inner peace.

However ,when it comes to financial markets, it’s a different story. We want to know the outcome in advance.

Money can do silly things to our minds. The promise of making big money caused some enormously bad decisions. Making bets too big, on blind faith or deep conviction – only to get it wrong – has cost a lot of people a lot of money. But greedy missteps pale in comparison to bad decisions from trying not to lose it.

Great timing isn’t just an everyday investor’s pursuit. The whole industry is fascinated with it. Selling at tops and scooping up bottoms is the fantasy of young traders, reporters, analysts, and managers alike.

Market-timing remains an energy-sucking pursuit of many investors. I’m guilty of it, for sure. There’s a self-induced pressure to provide accurate guidance all the time. Perfection is a near impossibility, so I have the attitude that if I aim high and fall a little short, over time my record will still be pretty admirable.

But even the best of the best can get it wrong sometimes. Check out this Smart Money magazine cover:

Smart Money Double your Nest Egg

It touted jumping into cheap stocks NOW. The problem is that the issue came out on September 16, 2008, the very Monday that the stock market started its worst drop since the Great Depression. Ouch!

Smart Money certainly isn’t alone in bad timing.

The BlackStone Group bought Hilton Hotels for $26 Billion in cash in 2007. It was possibly one of the worst timings for a big purchase in business history. The ensuing crisis would crush the hotel market.

And on July 24, 2001, Silverstein Properties purchased a 99-year lease on the World Trade Center for $3.2 billion. The whole complex was destroyed seven weeks later during the 9/11 terrorist attack.

So, when last week I made a call for lower markets ahead, I joined the ranks of abysmal timers. And for that, I’m sorry. But I have a few things to say about that. The first is: Years ago, I removed all emotions from my market calls. I go by the data, and the data foretold a story of lower prices. Everything lined up:

  • Seasonally weak Augusts, historically
  • Lower liquidity
  • Waning buying
  • Waxing selling
  • A plummeting Big Money Index (BMI)

Well, the investing gods decided that I’d look better with egg on my face. Last week delivered an about face: The BMI bottomed hard and has been ramping up since Friday August 21st.

Big Money Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

As annoying as it may be, and as embarrassing as it feels to be wrong at the worst time, I also said for weeks that July and August historically suggested ho-hum returns for the past 25 years. I also said that we should expect a ramping-up market September through December. It appears September arrived early.

What has me excited is what is getting bought. All the pain from the past few months is starting to see life. The most notable is monster tech buying:

MapSignals Sector Ranking Table

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Small caps also saw a major spark as the IWM Russell 2000 tracking ETF rose +7.3% since August 19th:

BigMoney Buy and Sell Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

This is decidedly good, as bull markets get jet fuel when growth catches a bid. The 285 Big Money buys last week averaged 80% of 100% in terms of 3-year sales growth and 60% in terms of 1-year earnings growth, so growth companies saw some inflows of capital they haven’t seen in a while. That’s bullish.

This year has been tough for timing. Markets are irritable and rotations are frequent. I have a friend who without fail a few times a week texts me: “I hate this market.” What’s up one month is down the next and vice versa. It gets annoying.

But here’s the curious thing: The examples above have one thing in common, aside from poor timing: While short-term we’re wrong, long-term we’re doing fine, since the winners worked out just fine.

  • First, Smart Money: Buying Equities in September 2008 would have stunk for a while, but eventually you’d be a winner. SPY fell 46% from September 1, 2008, to March 2009 but SPY is now up 354% from its peak and +747% from the trough.
  • Buying Hilton for $26 billion before the 2008 financial crisis sucked but today Hilton Worldwide is worth $35 billion and Hilton Grand Vacations is worth $5 billion, a 54% gain not counting any other spinoffs; not bad.
  • As for leasing the WTC for $3.2 billion less than 50 days before it was destroyed, according to a report in 2016, the Freedom Tower alone is now worth $3.8 billion.

Short-term colossal failures can become colossal wins in the long run.

Great investors typically have one thing in common – they hold a long view. So, while I was wrong about the market’s immediate direction, I have high confidence about its long-term direction. And buying the best quality stocks is my recipe for long-term success. Whether they are at near-term troughs or highs ultimately shouldn’t matter if you look out long enough.

In the short-term, tomorrow you could be up or down. But, I am looking for the same Zen in my investing life that I am in everyday life. If you know you’re moving forward, no matter what, then just chill. That makes the pursuit of getting timing right that much more fun.

On that note, I’ll close by saying I’m still right way more than I’m wrong because the BMI’s 30-year history of oversold and overbought instances have shown excellent predictive qualities.

So, despite being wrong (short-term) this time, I’ll keep playing that game.

A Frenchman once asked my wife where she’s from. When she replied “Belgium,” he said: “Well, no one’s perfect.” True, and neither am I. It makes me think of director Eddie Huang, who said: “People talk about perfect timing, but I think everything is perfect in its moment; you just want to capture that.”

All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.

Please see important disclosures below.

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Sector Spotlight by Jason Bodner
Market Timing Can Look Wrong and Still be Right

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Read Past Issues Here

About The Author

Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT

Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation/distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner

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Jason Bodner is a co-founder and co-owner of Mapsignals. Mr. Bodner is an independent contractor who is occasionally hired by Navellier & Associates to write an article and or provide opinions for possible use in articles that appear in Navellier & Associates weekly Market Mail. Mr. Bodner is not employed or affiliated with Louis Navellier, Navellier & Associates, Inc., or any other Navellier owned entity. The opinions and statements made here are those of Mr. Bodner and not necessarily those of any other persons or entities. This is not an endorsement, or solicitation or testimonial or investment advice regarding the BMI Index or any statements or recommendations or analysis in the article or the BMI Index or Mapsignals or its products or strategies.

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