Well, alright, there are just a few more things involved, but for me timing is the most important.
I suppose it relates back to that ‘sliding doors’ moment. Had you not turned left when you got off the bus this morning and turned right instead, you might have bumped into the love of your life.
Depressing but a possibility.
But more to the point, I am referring to those who rave about how great they are because they made lots of money when they sold their house, or bought shares low and sold very high and gave their lives a freedom from financial woes that ninety percent of us go through each month (or at least every few months when the dreaded power bill arrives).
These people are not geniuses, they have not discovered the secret to the financial markets. Yes, they would like to think they have, and indeed tell us so, but no they haven’t.
How can I be so sure?
Do a quick search of the main so called ‘expert’ economists, financial ‘wizards’ and see what they wrote as their predictions at the beginning of last year. They are there for all to see. And the one common thread throughout? They are almost all completely wrong.
I saw one the other day, adamant that inflation would reach twenty percent by the end of last year in the US. I have seen others who predicted a major crash in China (which will no doubt occur one day but no-one knows exactly when).
Timing. It is like predicting an interest rate increase. If you predict one publicly and loudly and one actually occurs within a month you are an instant expert. You could have been predicting an increase every month for two years but because you finally got one right you know everything, right?
Or if you predict that the next Apple iPad will be a total flop, which very senior people have done every year since the first model was released, and that year you happen to be right, suddenly people think you know everything.
Sorry, but it was just a lucky guess.
The markets are mainly driven by emotion. Yes there are some facts in there that a very, very few can follow and predict how people will react, but no-one gets it right all the time. Not even Warren Buffett.
The vast majority get it utterly, completely wrong, especially now when our markets are so wildly unpredictable.
So the next time someone tells you of their great gain when they sold their property, think how lucky they were to find the one buyer who fell in love with it and had to have it. Or the shares that could easily have tanked because of a bad asparagus crop out of Croatia.
It is all timing. Yes some call it luck, and I suppose it is lucky to get the timing right, but I prefer simple timing.
So next time you get off the bus, walk a different way to work.
You never know.